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Hybrid capital instruments originated from Trusted Preferred Stocks issued by Western countries in the early 1990s. In January 2004, Norwegian scholars Axel and Parson put forward a universal concept of mixed capital at the Norwegian National Business Administration Theme Annual Meeting (FIBE) for various issued mixed capital products, that is, mixed capital is A hybrid claim capital instrument issued by a company that combines the attributes of both debt and equity, usually with special option clauses. The world's first credit preference stock was issued by the American TEXCO company on October 27, 1993. The issuer sets up a "conduit" company abroad, and the preference shares issued by the issuer are guaranteed by the issuer's subordinated debt issued by "conduit" company and the equity of the issuer owned by "conduit" company.

Hybrid capital instrument

Right!

Hybrid capital instruments originated in the western countries in the early 1990s.

The world's first credit

Hybrid capital instruments first have the repayment, security,

Debt for hybrid capital instruments /

(1) China's commercial banks

Although the original purpose of the introduction of hybrid capital instruments in China was to optimize the capital structure of commercial banks, it was also an investment vehicle. Whether mixed capital instruments can develop healthily in China depends to a large extent on the approval of investors and financial markets. Whether or not the U.S. stock market is likely to fall into a marginalized predicament like China's stock market before the share split reform. From the perspective of how to continuously attract investors and enhance market liquidity, this article puts forward some relevant suggestions for improving China's mixed capital instruments.

(I) Improve the term structure of hybrid capital instruments

Judging from the development trend of mixed capital instruments in various countries in the world, most countries have given them a longer term. For example, the United Kingdom, France, and Hong Kong in China require such instruments to be permanent. Although the United States, Canada, and Germany have Scheduled regularly, but generally over 15 years. Therefore, under the condition that China's current market capital is sufficient, if it issues hybrid capital instruments with a term of more than 15 years or even a permanent maturity, it will be more conducive to the capital management of commercial banks on the one hand, and it can be attracted by a higher term premium on the other Investor returns.

(2) Set up the equity transfer provisions for hybrid capital instruments

With the issuance and listing of the three largest state-owned commercial banks in China, most of our commercial banks will become joint-stock companies by 2007. In this case, the capital management of commercial banks must not only meet the regulatory requirements of the CBRC, but also meet the requirements of the CSRC. Requirements to maintain listing conditions. In order to avoid the excessive asset-liability ratio of commercial banks, it is recommended to set up a conversion clause for listed banks to issue hybrid capital bonds, that is, investors should convert into ordinary shares at the conversion price within three years before the maturity of the bonds. The conversion clause is conducive to enhancing the market liquidity of hybrid capital instruments, and can stabilize the price of the underlying stock through investors' arbitrage operations on bonds and underlying stocks, achieving the dual goals of effective capital management of commercial banks and investor profitability.

(3) Timely launch of hybrid capital instruments of credit preference stock type

Domestic scholar Gao Jin (2005) found through empirical research that companies with poor financial prospects or low common stock pricing will tend to issue preferred stocks in the three financing methods of issuing bonds, common stocks and preferred stocks. At present, China's commercial banks have exactly two prerequisites for issuing preference shares, so the internal conditions for commercial banks to introduce preference shares have matured. However, at present, the reform of the split share structure of China's listed companies has not ended, and the issue of H shares and income tax has not yet reached a final solution. Therefore, the internal and external conditions for commercial banks to issue preferred shares have not yet been formed. Therefore, borrowing from the practice of the issuance of western credit preferred stocks, by setting up a conduit company outside the commercial bank to issue a hybrid capital instrument of the type of credit preferred stock, it not only opens a more flexible financing method for commercial banks to supplement their capital, but also enhances Market liquidity of commercial banks' common stocks and subordinated debt.