Chinese Banks Redeem 135.5 Billion Yuan in High-Cost Preferred Shares, Shift to Cheaper Bonds
A wave of Chinese banks, including CITIC, China Everbright, Ping An, China Merchants, Bank of Beijing, and Bank of Nanjing, are redeeming high-dividend preferred shares issued between 2014-2019, replacing them with lower-cost perpetual bonds. Total redemptions have reached 135.5 billion yuan in 2025, with CITIC Bank planning to redeem 35 billion yuan of its "CITIC Preferred 1" shares on October 26, 2026. Analysts attribute the trend to falling financing costs and the availability of cheaper capital instruments with rates below 3%, which also offer tax advantages.
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Common ground
- All agree that Chinese banks are redeeming high-cost preferred stocks and replacing them with cheaper perpetual bonds to save money.
- Everyone recognizes that this shift affects retail investors who hold wealth management products tied to these instruments.
- There is agreement that the redemption wave is a deliberate, not accidental, financial move by Chinese banks and regulators.
Points of contention
- The Regional Agent sees this as a quiet transfer of risk from institutions to ordinary savers without democratic input, while the Eastern Agent views it as a strategic optimization that benefits the real economy.
- The Neutral Agent insists it's primarily a math problem with clear winners and losers, but the Regional Agent argues that reducing it to numbers dismisses the human impact on millions of families.
- The Eastern Agent claims Chinese savers have a different psychology and trust in state guidance, while the Neutral Agent counters that they respond to the same incentives as any other investors.
Blind spots
- No one fully addresses how the lack of democratic accountability or public input in these financial decisions affects ordinary people's trust over the long term.
- The discussion overlooks the possibility that if inflation rises, the patience of savers accepting lower yields could suddenly evaporate, triggering a rapid shift out of wealth products.
- All participants fail to explore how this restructuring might impact small businesses or regional economies that depend on bank lending, not just retail investors.
WorldAttention’s read
This roundtable shows that China's bank redemption of 135.5 billion yuan in preferred stocks is a calculated cost-cutting move, swapping high-cost debt for cheaper perpetual bonds. While banks clearly benefit and regulators buy time, the main disagreement is whether this is a smart strategic upgrade or a quiet shift of risk onto ordinary savers. The Regional Agent highlights a lack of accountability and transparency for individuals, the Neutral Agent focuses on the math of yield compression and liquidity mismatches, and the Eastern Agent celebrates it as a sign of a maturing, state-guided system. All sides miss the deeper question of what happens if growth slows or inflation picks up, which could break the patience of millions of savers. Ultimately, this is a stable but risky bet that works as long as the economy keeps growing and people don't demand their money back all at once.
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Chinese Banks Rush to Redeem High-Cost Preferred Shares, Boosting Common Shareholder Returns
A wave of Chinese banks, led by CITIC Bank, are redeeming high-dividend preferred shares issued between 2014-2019, replacing them with lower-cost perpetual bonds. CITIC Bank plans to redeem 35 billion yuan of 'CITIC Preferred 1' shares with a 4.08% dividend rate on October 26, 2026. Other banks including China Everbright, Ping An, China Merchants, Bank of Beijing, and Bank of Nanjing have already redeemed a combined 135.5 billion yuan in preferred shares this year. The trend is driven by falling net interest margins (below 1.5%) and the availability of cheaper capital instruments like perpetual bonds with rates below 2%, which also offer tax advantages. Huayuan Securities forecasts 2026 preferred share redemptions could reach 150-200 billion yuan. The article argues this capital structure optimization benefits common shareholders by reducing fixed dividend obligations, increasing earnings per share, and improving future dividend capacity. The shift represents a broader industry trend as banks replace expensive capital with lower-cost alternatives.
Chinese Banks Redeem High-Cost Preferred Shares, Boosting Common Shareholder Returns
Chinese listed banks are collectively redeeming high-dividend preferred shares issued between 2014-2019, replacing them with lower-cost perpetual bonds. This trend, described as a 'redemption wave' by analysts, includes major banks like CITIC, China Everbright, Ping An, China Merchants, Bank of Beijing, and Bank of Nanjing, with total redemptions reaching 135.5 billion yuan in 2026 alone. Huayuan Securities forecasts 2026 preferred share redemptions could reach 150-200 billion yuan. The article, attributed to Yuanmeihui and published on Titanium Media, explains that banks are replacing preferred shares (with dividends around 4%) with perpetual bonds (yielding under 2%), which also offer tax advantages. This capital structure optimization is presented as a long-term benefit for common shareholders, as it reduces fixed dividend obligations, increases net profit available for common equity, and improves earnings per share (EPS). The analysis notes that CITIC Bank's redemption of its 35 billion yuan 'CITIC Preferred 1' issue, with a 4.08% dividend rate, is a key example of this strategy.
Read sourceBank preferred stock redemptions to reach 135.5 billion yuan in 2025 as high-cost instruments exit
Chinese banks are accelerating the redemption of high-cost preferred shares, with total redemptions expected to reach 135.5 billion yuan in 2025, according to a report by Tencent Stock citing the International Financial News. The latest is CITIC Bank, which plans to redeem all 35 billion yuan of its 'CITIC Preferred 1' shares in October 2026, following redemptions by Nanjing Bank, Beijing Bank, China Merchants Bank, Ping An Bank, and China Everbright Bank. Analysts attribute the trend to the expiration of five-year redemption windows and the availability of cheaper capital instruments. Huayuan Securities and PaiPai Wealth research director Liu Youhua note that banks are replacing preferred shares with perpetual bonds, which offer lower interest rates (often below 3%) and tax-deductible interest. The shift is reducing the supply of high-yield assets for wealth management products, potentially lowering fixed-income returns and increasing net value volatility, as fund managers face an 'asset shortage' and may need to increase equity allocations.
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CITIC Bank Plans to Redeem 350 Million Preferred Shares Worth 35 Billion Yuan
CITIC Bank announced it has received a no-objection response from the National Financial Regulatory Administration regarding the redemption of its preferred shares, and plans to redeem all 350 million 'CITIC Preferred 1' shares on October 26, 2026, totaling 35 billion yuan. These preferred shares were issued in October 2016 with an initial dividend rate of 3.80%. This is the sixth bank preferred stock redemption announced this year, following redemptions by Nanjing Bank, China Merchants Bank, and Ping An Bank, bringing the total redeemed amount for the year to 135.5 billion yuan. Bank preferred stocks are Tier 1 capital instruments with both equity and debt characteristics, typically including redemption clauses allowing banks to redeem after five years. Huayuan Securities fixed income team noted that such arrangements provide banks capital management flexibility to replace high-cost preferred stocks with lower-cost instruments when capital is sufficient and financing costs decline. Analysts believe the contraction of high-yield preferred stock supply may lead to an 'asset shortage' for wealth management funds, potentially forcing wealth management companies to increase allocations to equity assets, thereby pushing down the yield floor of fixed-income products and amplifying net value fluctuations.
Read sourceBank Preferred Stock Redemptions to Reach 135.5 Billion Yuan in 2025 as High-Cost Instruments Fade
Chinese banks are accelerating the redemption of high-cost preferred stocks, with total redemptions expected to reach 135.5 billion yuan in 2025. CITIC Bank announced plans to redeem all 350 million shares of its 'CITIC Preferred 1' on October 26, 2026, marking the sixth such redemption this year. Other banks including Nanjing Bank, Beijing Bank, China Merchants Bank, Ping An Bank, and China Everbright Bank have already completed redemptions. Analysts attribute the trend to the arrival of redemption windows and declining financing costs, as banks replace high-yield preferred stocks (with dividend rates around 4-6%) with lower-cost perpetual bonds (with coupon rates mostly below 3%). According to Huayuan Securities and PaiPai Wealth research director Liu Youhua, this represents a structural shift in bank capital supplement tools from preferred stocks to perpetual bonds. The contraction of preferred stock supply may exacerbate the 'asset shortage' for wealth management products, potentially lowering fixed-income product yields and increasing net value volatility.
Read sourceBank preferred stock redemptions to reach 135.5 billion yuan in 2025 as high-cost instruments exit
Chinese banks are accelerating the redemption of high-cost preferred shares, with total redemptions expected to reach 135.5 billion yuan in 2025, according to a report by International Financial News. The latest is CITIC Bank, which plans to redeem all 35 billion yuan of its 'CITIC Preferred 1' on October 26, 2026, after receiving regulatory approval. This follows redemptions by Bank of Nanjing, Bank of Beijing, China Merchants Bank, Ping An Bank, and China Everbright Bank. Analysts attribute the trend to the expiration of five-year redemption windows and falling financing costs. New perpetual bonds offer interest rates below 3%, compared to preferred stock dividend rates of 4-6%. Experts cited in the article say bank capital instruments are undergoing a structural shift from preferred shares to perpetual bonds, which are cheaper, faster to approve, and tax-deductible. The shrinking supply of high-yield preferred shares may worsen the 'asset shortage' for wealth management products, potentially lowering fixed-income returns and increasing net value volatility, according to analysts.
Read sourceBank preferred stock redemptions to reach 135.5 billion yuan in 2025 as high-cost instruments exit
Chinese banks are accelerating the redemption of high-cost preferred stock, with total redemptions expected to reach 135.5 billion yuan in 2025, according to a report by International Financial News. The latest is CITIC Bank's plan to redeem all 35 billion yuan of its 'CITIC Preferred 1' shares in October 2026, following redemptions by Nanjing Bank, Beijing Bank, China Merchants Bank, Ping An Bank, and China Everbright Bank. Analysts attribute the trend to the arrival of redemption windows for preferred stock issued between 2014 and 2016, which carried dividend rates of 4-6%, and the availability of cheaper alternatives. Huayuan Securities and PaiPai Wealth research director Liu Youhua note that banks are replacing high-cost preferred stock with lower-cost perpetual bonds, which offer advantages including lower interest rates (often below 3%), faster regulatory approval, and tax-deductible interest. The structural shift in capital instruments is reducing the supply of high-yield assets available to wealth management products, potentially lowering fixed-income product returns and increasing net value volatility, according to analysts.
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