Chinese Banks Seek $30 Billion in Buyback Loans as PBOC Cuts the Rate to 1%

Photo: Kmchang28, Wikimedia Commons, CC BY-SA 4.0 (file photo, 2023). The People’s Bank of China Shanghai headquarters building.

Chinese banks have asked the central bank for more than 200 billion yuan, or about $30 billion, in cheap loan quotas to fund share buybacks and stake purchases by listed companies, the People’s Bank of China said on Wednesday, Nov. 4. In the same notice, the PBOC said the interest rate it charges banks under the program fell by 0.25 percentage point to 1%, effective that day. Shares in Shanghai and Shenzhen then had their best session in seven months, Reuters reported.

The PBOC posted the notice at 9:03 a.m. Beijing time, which was 8:03 p.m. Tuesday ET. It said the applications followed a Nov. 2 meeting it held with the National Financial Regulatory Administration and the China Securities Regulatory Commission, and that it would “continue to fully meet” banks’ demand for the loans (TBR translation). Reuters and Caixin Global separately reported the 200 billion yuan figure and the new rate.

How the buyback relending program works

Under this program, a bank lends money to a listed company or a major shareholder that wants to buy the company’s stock. The bank then gets the full amount back from the central bank as a “relending” loan. The PBOC’s notice says it covers 100% of each eligible loan, so the bank does not have to put up its own funds. Loans to companies run for one year and can be rolled over when they mature, and banks may charge borrowers a margin on top of the 1% they pay the central bank.

Not every lender can take part. The notice limits the program to 21 national banks and five city commercial banks that regulators treat as systemically important. Smaller regional lenders are left out.

The quotas are a ceiling on what banks can draw, not money already lent. The 200 billion yuan figure shows how much lenders asked for this week. It does not show how much will reach companies or how much stock they will buy.

China first set up the program in 2024. Reuters dates it to September of that year, while state news agency Xinhua says the PBOC created it in October. On Monday, regulators said they would change the program from a temporary measure into a standing one, CNA reported. TBR covered that Monday package, including a separate asset-swap tool for brokers and insurers, in its report on the PBOC reopening its stock swap facility. The two tools serve different groups: the swap lends to financial firms that buy stocks, while relending finances companies and their big shareholders buying their own shares.

By the numbers: rate cut and market reaction

The Shanghai Composite Index closed up 2.16% at 3,686.17 on Wednesday, and the Shenzhen Component Index rose 4.22% to 11,335.69, Xinhua reported. ✓Claim by Xinhua (Chinese state media); confirmed by Reuters Reuters described the session as China’s best day in seven months, saying it was partly driven by the PBOC announcement. Investors also pointed to the U.S. midterm election results, according to Reuters.

The rally comes after a steep slide. Reuters said China has had the worst-performing major stock market in the world this year, and that the CSI 300 index of large Shanghai and Shenzhen stocks was down 11% from January. In October the CSI 300 had its biggest monthly fall in a decade, led by a slump in artificial-intelligence shares. CNA put the October loss at 8.5%, the worst month since early 2016.

Xinhua, citing the PBOC, said companies and shareholders have signed about 440 billion yuan in buyback and stake-increase loans since the program began, and that more than 280 billion yuan has been drawn. !Unverified claim, Xinhua (Chinese state media) TBR could not match those running totals against a published PBOC table.

What analysts say

Founder Securities said in a note quoted by Reuters that the changes would “lower the borrowing costs and would make listed companies more willing … to increase shareholdings or execute buybacks, thus injecting stability into the market.”

Others were less certain. Wang Yapei, a fund manager at Zijie Private Fund, told Reuters that major shareholders of listed companies may have little reason to borrow money to buy shares whose prices are falling. Hao Zhou, a Hong Kong-based analyst at Guotai Haitong Securities, told Reuters the move sends a strong signal that Beijing is determined to steady the market. He added that global volatility and outside uncertainty still weigh heavily on investor sentiment, according to CNA.

The central bank itself urged lenders to speed up the loans “to safeguard stable operation of the capital markets,” Reuters reported.

Why it matters outside China

Chinese shares make up a large part of many emerging-market funds held by U.S. investors, and Hong Kong is one of the main places Chinese companies go to raise money. Reuters said a sell-off in AI stocks drove October’s slide. A lasting rebound or a fresh drop in China would affect U.S. fund returns and the timing of new share sales in Hong Kong.

The program also shows the way Beijing has chosen to support stocks. It is not buying shares directly. Instead it cuts the cost of credit and leaves the decision to borrow with companies and shareholders. Lower funding costs alone may not get them to borrow, a limit that Wang’s comment points to.

What to watch

The next useful numbers will be how much of the 200 billion yuan in quotas turns into signed loans, and whether more listed companies announce buybacks backed by these loans in their exchange filings. The PBOC has not said when it will next update the totals. For more on markets and policy across the region, see TBR’s Asia-Pacific news coverage, and for U.S. markets, TBR’s business and finance news.

Sources

• People’s Bank of China: notice on cutting the stock buyback and stake-increase relending rate (Nov. 4, 2026, Chinese)
• Reuters via MarketScreener: Chinese banks have applied for $30 billion worth of loan quota to fund share purchases
• Caixin Global: China cuts stock buyback relending rate to 1% to support market
• CNA: Beijing’s stock market recovery measures
• Xinhua (state media): Chinese stocks close higher, Nov. 4
• Xinhua (state media): PBOC update on the stock repurchase relending facility

Additional sources

• China Daily (state-owned): coverage of the relending rate cut
• The Boston Report: China’s top 100 developers’ sales in October