Bank of China stock faces tighter FX reserves after PBOC move

China's central bank has changed two policy settings that shape the operating backdrop for Bank of China. The People's Bank of China cut the relending rate for share buybacks and stake increases on November 4, while a higher foreign-currency deposit reserve ratio will take effect on November 15. The Asian Banker reported the measures in a November 6 banking brief.

Bank of China stock traded at 0.72 euros on Lang & Schwarz at 09:37 CET on Thursday, November 12, 2026.

Cheaper funding for share purchases

The PBOC reduced the rate applied to its share-buyback and stake-increase relending facility from 1.25 percent to 1 percent. Under the scheme, banks lend to listed companies and major shareholders for share purchases and then obtain central-bank funding equivalent to the loan amount. Banks retain the credit risk and add a margin when pricing the loans.

The lower rate reduces the funding cost for participating borrowers. The Asian Banker said banks had applied for more than CNY 200 billion in quotas after a November 2 meeting. Since the programme began, banks had signed about CNY 440 billion in loans, while disbursements exceeded CNY 280 billion.

Higher reserve requirement from November 15

The PBOC also announced on November 3 that financial institutions' foreign-currency deposit reserve requirement would rise by two percentage points to 6 percent. The change follows renminbi appreciation and is intended to strengthen foreign-exchange liquidity management.

For banks, the measure has a different effect from the cheaper buyback facility. A higher reserve ratio requires a larger share of foreign-currency deposits to remain in reserve, leaving less funding available for lending, investment or sale. The change reverses the reduction to 4 percent made in September 2023 and is the first increase since December 2021.

Mixed signal for bank investors

The policy combination is mixed for investors. Cheaper relending can support equity-market activity and improve access to funding for buybacks, while tighter foreign-currency liquidity can constrain part of banks' balance-sheet flexibility. The effect on Bank of China will depend on the composition of its foreign-currency deposits, lending demand and capital-market activity.

The policy backdrop arrives after stronger results across China's largest state-owned banks, according to The Asian Banker. The publication said the six largest lenders reported higher nine-month attributable profits, while also noting that margin stabilisation across listed banks masked weaker performances at some individual institutions.

China's policy direction remains the key market context for banks, with the next scheduled data focus on industrial production, retail sales, investment and property activity on November 16. The broader sector will also watch the November 20 loan prime rate fixing. See current Euro Stoxx 50 market conditions.

More policy and earnings developments can be found in more news and analyses on Bank of China stock.