The China Banking and Insurance Regulatory Commission has launched a pilot programme to moderately relax rules for commercial banks’ mergers and acquisitions (M&A) lending to technology companies, adjusting selected provisions of the existing M&A loan risk management guidance. For “controlling” acquisitions, the pilot raises the maximum loan-to-transaction ratio from 60% to 80% and extends the typical maximum loan tenor from seven years to 10 years. The pilot applies in 18 cities: Beijing, Shanghai, Tianjin, Chongqing, Nanjing, Hangzhou, Hefei, Jinan, Wuhan, Changsha, Guangzhou, Chengdu, Xi’an, Ningbo, Xiamen, Qingdao, Shenzhen and Suzhou. Criteria were set for pilot cities, pilot banks and pilot technology companies after seeking views from the National Development and Reform Commission, the Ministry of Science and Technology and the Ministry of Industry and Information Technology. Eligible banks include large commercial banks, joint-stock commercial banks and city commercial banks with sound operations, strong governance, prudential ratios meeting supervisory requirements, and robust M&A lending expertise and risk controls, while eligible technology companies are expected to have strong innovation capabilities, significant technology upgrade needs, good commercialisation prospects and a solid credit record. Next steps focus on implementation: local financial regulatory bureaus are to strengthen coordination, and pilot banks are expected to issue detailed internal rules, build differentiated credit assessment frameworks, tighten monitoring of the use of loan proceeds, and develop specialised talent with technology-sector and M&A expertise.
China Banking and Insurance Regulatory Commission 2025-03-05
China Banking and Insurance Regulatory Commission pilots looser M&A loan limits for tech companies with an 80% financing cap and 10-year tenor
The China Banking and Insurance Regulatory Commission has launched a pilot to ease M&A lending rules for banks targeting tech companies, raising the loan-to-transaction ratio from 60% to 80% and extending loan tenors from seven to ten years. Covering 18 cities, it involves large, joint-stock, and city commercial banks with strong governance and M&A expertise, and tech firms with robust innovation prospects. Local regulators will oversee implementation, requiring banks to establish internal rules and credit assessment frameworks.