China Banking and Insurance Regulatory Commission consults on revised framework for commercial bank M&A loans expanding support to qualifying minority-stake deals

The China Banking and Insurance Regulatory Commission opened a public consultation on a draft Measures for the administration of commercial bank merger and acquisition (M&A) loans, replacing its 2015 risk management guidelines. The proposal would broaden the range of transactions eligible for M&A loan support, introduce differentiated business-qualification requirements for banks, and adjust core loan terms while reinforcing repayment-capacity assessment. The 33-article draft would extend M&A loan applicability beyond controlling acquisitions to also cover equity-participation (minority-stake) acquisitions that meet specified conditions. It would set differentiated asset-size requirements for banks conducting controlling versus minority-stake M&A lending, alongside baseline expectations such as good supervisory ratings and meeting key prudential metrics. Loan conditions would be relaxed by raising the cap on the share of the transaction price that can be financed and extending the maximum loan tenor, and banks would be required to focus their due diligence on the acquirer’s debt-servicing capacity while also considering post-transaction prospects, synergies and operating performance. The regulator said it will review feedback, revise the draft as needed and publish the final measures for implementation in due course.