China may need $190 billion to fully recapitalise Industrial and Commercial Bank of China and Agricultural Bank of China, and even then the lenders would have a tough time drawing foreign investors, Standard & Poor's said on Thursday. That figure was a high-end estimate that included the cost of resolving 1.5 trillion yuan ($181 billion) in bad loans and other assets, reserves to guard against future bad loans, and a "sound level" of capitalisation to ensure future growth.
China is trying to transform its "Big Four" state banks from government-directed lenders into commercially run powerhouses backed by strategic foreign investment and overseas stock listings.
In its latest move, Beijing approved a $15 billion injection for ICBC, a smaller-than-expected bail-out for the country's largest lender.
S&P said a minimum rescue package for ICBC and Agricultural Bank would cost another $110 billion, enough to attain a level of capitalisation sufficient to support current balance sheets and reach a minimum level of provisions against future bad loans.
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