Analysis On The Financing Effect Of Perpetual Capital Bonds Issued By Small And Medium-sized Bank

Since the promulgation of Basel Ⅲ,the capital supervision of international banks has become increasingly strict,and China has followed up accordingly.The strict supervision has led to the increase of capital requirements and the gradual increase of risk weighted assets.In order to meet the increasing capital replenishment pressure of commercial banks,China’s regulatory authorities encourage banks to issue innovative capital replenishment tools to replenish capital.After the issuance of "19 Bank of China perpetual bond 01",banks followed up one after another,and urban rural commercial banks became an important subject of perpetual bond issuance.Therefore,this paper selects the sustainable bonds of small and medium-sized banks as the research object,starting with the nature of capital supplement tools and financing tools of sustainable bonds,and studies the differences between sustainable bonds and other capital supplement tools in terms of cost and issuance difficulty in practical application,as well as the promotion effect of sustainable bonds on the overall financial effect and stock price of small and medium-sized banks.By analyzing the impact of Basel Accord on the capital management of commercial banks and the literature related to innovative capital supplement tools,this paper shows that the sustainable debt of commercial banks is produced under the background of the increase of capital requirements and the relaxation of innovation of capital supplement tools caused by Basel Accord.At the same time,the generation of sustainable debt is mainly different from the existing financing tools to solve the problems of the issuance convenience of preferred shares.Therefore,perpetual bonds have the characteristics of capital supplement tools.From the research of non bank perpetual bonds,at present,as a financing tool,non bank perpetual bonds have the effect of improving the financial situation and stock price in the short term for the construction real estate enterprises issuing perpetual bonds.Therefore,perpetual bonds also have the characteristics of financing tools.Next,this paper briefly analyzes the current situation of sustainable bond issuance of small and medium-sized banks.Firstly,it defines the sustainable debt of small and medium-sized banks according to the regulatory policies at home and abroad.Next,it analyzes the current situation of sustainable bond issuance of commercial banks and the causes of sustainable bond issuance of small and medium-sized banks.Then,this paper will conduct a case study on the issuance of perpetual bonds by Bank of Hangzhou.After analyzing the basic situation,basic terms and issuing motivation of Bank of Hangzhou,this paper analyzes the financing effect of Bank of Hangzhou issuing perpetual bonds.Firstly,it introduces the research framework of financing effect analysis.This paper explores the financing effect of perpetual debt from two aspects: the characteristics of capital supplement tools and financing tools.In terms of the characteristics of capital replenishment tools,this paper selects the perspectives of issuance simplicity,financing cost and accounting treatment to make a comparative analysis of various capital replenishment tools.In terms of the characteristics of financing instruments,this paper considers from the perspective of the company and the market.From the perspective of the company,this paper analyzes the financial effect of the issuance of perpetual bonds on commercial banks.From the perspective of market,this paper analyzes the market effect by analyzing the changes of stock price after the issuance of perpetual bonds.After the preliminary analysis according to the capital structure theory and the operation theory of commercial banks,this paper takes the Bank of Hangzhou as a case for case analysis.This paper uses the various financing instruments issued by the Bank of Hangzhou for comparative analysis.The company level selects appropriate financial indicators according to four aspects,compares and analyzes the data of 10 quarters before and after the issuance of perpetual bonds,and uses the factor analysis method for comprehensive financial effect analysis.For the exploration of the market impact of the issuance of sustainable bonds,this paper uses the qualitative research method to explore whether the issuance of sustainable bonds will send a good signal to the market,so as to improve the stock price.After the above analysis,this paper draws the research conclusion.This paper holds that,compared with the existing financing instruments,the issuance cost and convenience of perpetual bonds are significantly lower than those of preferred shares and common shares.At the same time,if the issuance time is properly selected,the issuance cost can even be lower than that of common shares.In terms of accounting treatment,perpetual debt is included in equity,and the treatment method is better than subordinated debt.In terms of financial effect,through factor analysis,this paper finds that the ranking of Bank of Hangzhou’s financial score rises after the issuance of perpetual bonds,which rises rapidly in the short term and decreases in the long term.Therefore,the financial effect of perpetual bonds is significant in the short term and weak in the long run.In the market,the issuance of perpetual bonds will significantly increase the stock price in the short term,which can obtain a good market effect.Through the theoretical analysis and the case analysis of Bank of Hangzhou,this paper puts forward some suggestions for small and medium-sized banks to issue perpetual bonds at the right time,reasonably set terms,correctly treat its financing effect and pay attention to endogenous financing,and puts forward some suggestions for improving laws and regulations,reducing the difficulty of issuing perpetual bonds and further promoting the innovation of capital supplement tools,In order to make sustainable debt,an innovative capital supplement tool,better used by small and medium-sized banks.