China's four biggest banks may have to raise up to $400 billion to meet new global capital rules, an onerous task that could pressure them to slow down lending at a time when Beijing wants them to help prop up economic growth.
The Financial Stability Board (FSB) this week finalized rules for ensuring banks do not become "too big to fail", a pledge made by the G20 after governments spent more than $1.5 trillion rescuing financial firms in the 2008 financial crisis.
The rules will apply to China's major state lenders, a coup for Western banks which had complained that a proposed exemption for emerging market institutions would give the Chinese banks an unfair competitive advantage as they expanded overseas.
The reforms require the world's 30 systemically important banks, known as GSIBs, to hold a buffer of capital that can be written down to protect taxpayers if the bank goes bust.
This layer of Total Loss Absorbing Capacity, or TLAC, comprises a large chunk of debt and comes on top of banks' core Basel capital requirements.