China National Tobacco Company and its subsidiaries will invest CNY 60 billion in capital increases planned by Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (ABC), as Beijing moves to strengthen the balance sheets of major state-owned lenders.
The investments form part of a combined CNY 260 billion private placement announced on September 6. China’s Ministry of Finance will provide the remaining CNY 200 billion, with the new shares subject to a five-year lock-up period described by Beijing as “long-term patient capital.”
How the bank investments will be allocated
ICBC, the world’s largest bank by assets, plans to raise up to CNY 100 billion through an A-share private placement. The Ministry of Finance is expected to contribute CNY 70 billion, while China Tobacco will provide CNY 30 billion.
ABC will seek CNY 160 billion in new capital. The Ministry of Finance will contribute CNY 130 billion, and China Tobacco will again invest CNY 30 billion. Both banks said the proceeds will be used to replenish core Tier 1 capital, and each has signed a strategic cooperation agreement with China Tobacco.
State lenders face pressure on capital and margins
The financing is part of a wider CNY 360 billion support package that also covers insurers and policy banks. It represents the second major round of capital support for China’s state-owned financial institutions under a policy framework first outlined in the government’s March 2026 work report.
China’s largest banks have been operating under tighter capital adequacy requirements while facing weaker lending profitability. ICBC and ABC both reported net interest margins of approximately 1.28% to 1.29% in the first half of 2026.
China National Tobacco, which controls almost the entire domestic cigarette market, is one of the country’s most consistently profitable state enterprises. Its industry-wide taxes and profits reached CNY 16,570 billion in 2025, giving the company substantial capacity to participate in state-backed financial initiatives.
The tobacco monopoly has invested in the banking sector before. In March 2025, it committed CNY 75.8 billion to Bank of Communications. Following the latest transactions, its cumulative investment in major Chinese banks is expected to reach approximately CNY 780 billion.
