Regulator approves M&A lending
December 18, 2008 | BY
clpstaff &clp articles“Groundbreaking” rules give domestic commercial banks important role
The banking regulator has issued new rules which allow lending for M&A transactions, opening the door to leveraged buyouts in the PRC.
The Guidelines on Risk Management of Acquisition Loans of Commercial Banks were issued by the China Banking Regulatory Commission (CBRC) on December 6. They allow “strong” commercial banks to loan money to companies (or their subsidiaries) for the purpose of paying M&A transaction fees.
“This is a groundbreaking rule and should be listed as one of the most important rules issued by CBRC to date,” says Zhang Xin, partner of Global Law Office. “It opens the door to a new banking area and will have a tremendous impetus to the structuring and execution of M&A deals.”
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