Guidelines for Risk Management by Commercial Banks of Loans Extended for Mergers and Acquisitions
商业银行并购贷款风险管理指引
CBRC relaxes M&A loan requirements.
See the digest for details on the revision.
(Issued by the China Banking Regulatory Commission on, and effective as of, February 10 2015.)
(中国银行业监督管理委员会于二零一五年二月十日公布施行。)
银监发〔2015〕5号
第一章 总则
第一条 为规范商业银行并购贷款经营行为，提高商业银行并购贷款风险管理能力，加强商业银行对经济结构调整和资源优化配置的支持力度，促进银行业公平竞争，维护银行业合法稳健运行，根据《中华人民共和国银行业监督管理法》、《中华人民共和国商业银行法》等法律法规，制定本指引。
第二条 本指引所称商业银行是指依照《中华人民共和国商业银行法》设立的商业银行法人机构。
第三条 本指引所称并购，是指境内并购方企业通过受让现有股权、认购新增股权，或收购资产、承接债务等方式以实现合并或实际控制已设立并持续经营的目标企业或资产的交易行为。
并购可由并购方通过其专门设立的无其他业务经营活动的全资或控股子公司（以下称子公司）进行。
第四条 本指引所称并购贷款，是指商业银行向并购方或其子公司发放的，用于支付并购交易价款和费用的贷款。
第五条 开办并购贷款业务的商业银行法人机构应当符合以下条件：
（一）有健全的风险管理和有效的内控机制；
（二）资本充足率不低于10%；
（三）其他各项监管指标符合监管要求;
（四）有并购贷款尽职调查和风险评估的专业团队。
商业银行开办并购贷款业务前，应当制定并购贷款业务流程和内控制度，并向监管机构报告。商业银行开办并购贷款业务后，如发生不能持续满足上述条件之一的情况，应当停止办理新的并购贷款业务。
第六条 商业银行开办并购贷款业务应当遵循依法合规、审慎经营、风险可控、商业可持续的原则。
第七条 商业银行应制定并购贷款业务发展策略，充分考虑国家产业、土地、环保等相关政策，明确发展并购贷款业务的目标、客户范围、风险承受限额及其主要风险特征，合理满足企业兼并重组融资需求。
第八条 商业银行应按照管理强度高于其他贷款种类的原则建立相应的并购贷款管理制度和管理信息系统，确保业务流程、内控制度以及管理信息系统能够有效地识别、计量、监测和控制并购贷款的风险。
商业银行应按照监管要求建立并购贷款统计制度，做好并购贷款的统计、汇总、分析等工作。
第九条 银监会及其派出机构依法对商业银行并购贷款业务实施监督管理，发现商业银行不符合业务开办条件或违反本指引有关规定，不能有效控制并购贷款风险的，可根据有关法律法规采取责令商业银行暂停并购贷款业务等监管措施。
第二章 风险评估
第十条 商业银行应在全面分析战略风险、法律与合规风险、整合风险、经营风险以及财务风险等与并购有关的各项风险的基础上评估并购贷款的风险。商业银行并购贷款涉及跨境交易的，还应分析国别风险、汇率风险和资金过境风险等。
第十一条 商业银行评估战略风险，应从并购双方行业前景、市场结构、经营战略、管理团队、企业文化和股东支持等方面进行分析，包括但不限于以下内容：
（一）并购双方的产业相关度和战略相关性，以及可能形成的协同效应；
（二）并购双方从战略、管理、技术和市场整合等方面取得额外回报的机会；
（三）并购后的预期战略成效及企业价值增长的动力来源；
（四）并购后新的管理团队实现新战略目标的可能性；
（五）并购的投机性及相应风险控制对策；
（六）协同效应未能实现时，并购方可能采取的风险控制措施或退出策略。
第十二条 商业银行评估法律与合规风险，包括但不限于分析以下内容：
（一）并购交易各方是否具备并购交易主体资格；
（二）并购交易是否按有关规定已经或即将获得批准，并履行必要的登记、公告等手续；
（三）法律法规对并购交易的资金来源是否有限制性规定；
（四）担保的法律结构是否合法有效并履行了必要的法定程序；
（五）借款人对还款现金流的控制是否合法合规；
（六）贷款人权利能否获得有效的法律保障；
（七）与并购、并购融资法律结构有关的其他方面的合规性。
第十三条 商业银行评估整合风险，包括但不限于分析并购双方是否有能力通过以下方面的整合实现协同效应：
（一）发展战略整合；
（二）组织整合；
（三）资产整合；
（四）业务整合；
（五）人力资源及文化整合。
第十四条 商业银行评估经营及财务风险，包括但不限于分析以下内容：
（一）并购后企业经营的主要风险，如行业发展和市场份额是否能保持稳定或增长趋势,公司治理是否有效，管理团队是否稳定并且具有足够能力，技术是否成熟并能提高企业竞争力，财务管理是否有效等；
（二）并购双方的未来现金流及其稳定程度；
（三）并购股权（或资产）定价高于目标企业股权（或资产）合理估值的风险；
（四）并购双方的分红策略及其对并购贷款还款来源造成的影响；
（五）并购中使用的债务融资工具及其对并购贷款还款来源造成的影响；
（六）汇率和利率等因素变动对并购贷款还款来源造成的影响。
商业银行应当综合考虑上述风险因素，根据并购双方经营和财务状况、并购融资方式和金额等情况，合理测算并购贷款还款来源，审慎确定并购贷款所支持的并购项目的财务杠杆率，确保并购的资金来源中含有合理比例的权益性资金，防范高杠杆并购融资带来的风险。
第十五条 商业银行应在全面分析与并购有关的各项风险的基础上，建立审慎的财务模型，测算并购双方未来财务数据，以及对并购贷款风险有重要影响的关键财务杠杆和偿债能力指标。
第十六条 商业银行应在财务模型测算的基础上，充分考虑各种不利情形对并购贷款风险的影响。 不利情形包括但不限于：
（一）并购双方的经营业绩（包括现金流）在还款期内未能保持稳定或增长趋势；
（二）并购双方的治理结构不健全，管理团队不稳定或不能胜任；
（三）并购后并购方与目标企业未能产生协同效应；
（四）并购方与目标企业存在关联关系，尤其是并购方与目标企业受同一实际控制人控制的情形。
第十七条 商业银行应在全面评估并购贷款风险的基础上，确认并购交易的真实性，综合判断借款人的还款资金来源是否充足，还款来源与还款计划是否匹配，借款人是否能够按照合同约定支付贷款利息和本金等，并提出并购贷款质量下滑时可采取的应对措施或退出策略,形成贷款评审报告。
第三章 风险管理
第十八条 商业银行全部并购贷款余额占同期本行一级资本净额的比例不应超过50%。
第十九条 商业银行应按照本行并购贷款业务发展策略，分别按单一借款人、集团客户、行业类别、国家或地区对并购贷款集中度建立相应的限额控制体系，并向银监会或其派出机构报告。
第二十条 商业银行对单一借款人的并购贷款余额占同期本行一级资本净额的比例不应超过5%。
第二十一条 并购交易价款中并购贷款所占比例不应高于60%。
第二十二条 并购贷款期限一般不超过七年。
第二十三条 商业银行应具有与本行并购贷款业务规模和复杂程度相适应的熟悉并购相关法律、财务、行业等知识的专业人员。
第二十四条 商业银行应在内部组织并购贷款尽职调查和风险评估的专业团队，对本指引第十一条到第十七条的内容进行调查、分析和评估，并形成书面报告。
前款所称专业团队的负责人应有3年以上并购从业经验，成员可包括但不限于并购专家、信贷专家、行业专家、法律专家和财务专家等。
第二十五条 商业银行应在并购贷款业务受理、尽职调查、风险评估、合同签订、贷款发放、贷后管理等主要业务环节以及内部控制体系中加强专业化的管理与控制。
第二十六条 商业银行受理的并购贷款申请应符合以下基本条件：
（一）并购方依法合规经营，信用状况良好，没有信贷违约、逃废银行债务等不良记录；
（二）并购交易合法合规，涉及国家产业政策、行业准入、反垄断、国有资产转让等事项的，应按相关法律法规和政策要求，取得有关方面的批准和履行相关手续；
（三）并购方与目标企业之间具有较高的产业相关度或战略相关性，并购方通过并购能够获得目标企业的研发能力、关键技术与工艺、商标、特许权、供应或分销网络等战略性资源以提高其核心竞争能力。
第二十七条 商业银行可根据并购交易的复杂性、专业性和技术性，聘请中介机构进行有关调查并在风险评估时使用该中介机构的调查报告。
有前款所述情形的，商业银行应建立相应的中介机构管理制度，并通过书面合同明确中介机构的法律责任。
第二十八条 并购方与目标企业存在关联关系的，商业银行应当加强贷前调查，了解和掌握并购交易的经济动机、并购双方整合的可行性、协同效应的可能性等相关情况，核实并购交易的真实性以及并购交易价格的合理性，防范关联企业之间利用虚假并购交易套取银行信贷资金的行为。
第二十九条 商业银行原则上应要求借款人提供充足的能够覆盖并购贷款风险的担保，包括但不限于资产抵押、股权质押、第三方保证，以及符合法律规定的其他形式的担保。以目标企业股权质押时，商业银行应采用更为审慎的方法评估其股权价值和确定质押率。
第三十条 商业银行应根据并购贷款风险评估结果，审慎确定借款合同中贷款金额、期限、利率、分期还款计划、担保方式等基本条款的内容。
第三十一条 商业银行应在借款合同中约定保护贷款人利益的关键条款，包括但不限于：
（一）对借款人或并购后企业重要财务指标的约束性条款；
（二）对借款人特定情形下获得的额外现金流用于提前还款的强制性条款；
（三）对借款人或并购后企业的主要或专用账户的监控条款；
（四）确保贷款人对重大事项知情权或认可权的借款人承诺条款。
第三十二条 商业银行应通过本指引第三十一条所述的关键条款约定在并购双方出现以下情形时可采取的风险控制措施：
（一）重要股东的变化；
（二）经营战略的重大变化；
（三）重大投资项目变化；
（四）营运成本的异常变化；
（五）品牌、客户、市场渠道等的重大不利变化；
（六）产生新的重大债务或对外担保；
（七）重大资产出售；
（八）分红策略的重大变化；
（九）担保人的担保能力或抵质押物发生重大变化；
（十）影响企业持续经营的其他重大事项。
第三十三条 商业银行应在借款合同中约定提款条件以及与贷款支付使用相关的条款，提款条件应至少包括并购方自筹资金已足额到位和并购合规性条件已满足等内容。
商业银行应按照借款合同约定，加强对贷款资金的提款和支付管理，做好资金流向监控，防范关联企业借助虚假并购交易套取贷款资金，确保贷款资金不被挪用。
第三十四条 商业银行应在借款合同中约定，借款人有义务在贷款存续期间定期报送并购双方、担保人的财务报表以及贷款人需要的其他相关资料。
第三十五条 商业银行在贷款存续期间，应加强贷后检查，及时跟踪并购实施情况，定期评估并购双方未来现金流的可预测性和稳定性，定期评估借款人的还款计划与还款来源是否匹配，对并购交易或者并购双方出现异常情况的，及时采取有效措施保障贷款安全。
并购方与目标企业存在关联关系的，商业银行应加大贷后管理力度，特别是应确认并购交易得到实际执行以及并购方对目标企业真正实施整合。
第三十六条 商业银行在贷款存续期间，应密切关注借款合同中关键条款的履行情况。
第三十七条 商业银行应按照不低于其他贷款种类的频率和标准对并购贷款进行风险分类和计提拨备。
第三十八条 并购贷款出现不良时，商业银行应及时采取贷款清收、保全，以及处置抵质押物、依法接管企业经营权等风险控制措施。
第三十九条 商业银行应明确并购贷款业务内部报告的内容、路线和频率，并应至少每年对并购贷款业务的合规性和资产价值变化进行内部检查和独立的内部审计，对其风险状况进行全面评估。当出现并购贷款集中度趋高、贷款风险分类趋降等情形时，商业银行应提高内部报告、检查和评估的频率。
第四十条 商业银行在并购贷款的不良贷款额或不良率上升时应加强对以下内容的报告、检查和评估：
（一）并购贷款担保的方式、构成和覆盖贷款本息的情况；
（二）针对不良贷款所采取的清收和保全措施；
（三）处置质押股权的情况；
（四）依法接管企业经营权的情况；
（五）并购贷款的呆账核销情况。
第四章 附则
第四十一条 商业银行贷款支持已获得目标企业控制权的并购方企业，为维持对目标企业的控制权而受让或者认购目标企业股权的，适用本指引。
第四十二条 政策性银行、外国银行分行和企业集团财务公司开办并购贷款业务的，参照本指引执行。
第四十三条 本指引所称并购双方是指并购方与目标企业。
第四十四条 本指引由中国银监会负责解释。
第四十五条 本指引自印发之日起施行。《中国银监会关于印发<商业银行并购贷款风险管理指引>的通知》(银监发〔2008〕84号)同时废止。
Yin Jian Fa [2015] No.5
Part One: General Provisions
Article 1: These Guidelines have been formulated pursuant to laws and regulations such as the PRC Banking Regulation Law and the PRC Commercial Banking Law in order to regulate the business of loans for mergers and acquisitions (M&A Loans) of commercial banks, enhance the capacity of commercial banks to manage M&A Loan risks, strengthen the support of commercial banks in the modification of the economic structure and the improved allocation of resources, promote fair competition in the banking sector, and safeguard the compliant and sound operation of the banking sector.
Article 2: For the purposes of these Guidelines, the term “commercial bank” means a commercial bank with legal personality established in accordance with the PRC Commercial Banking Law.
Article 3: For the purposes of these Guidelines, the term “mergers and acquisitions” means transactions wherein the acquiring enterprises in China effect a merger or obtain de facto control of an established and operating target enterprise or asset by way of an acquisition of existing equity, subscription for additional equity, acquisition of assets, assumption of liabilities, etc.
A merger or acquisition may be effected by an acquiring party through a wholly-owned or controlled subsidiary (Subsidiary) that is established expressly for the purpose of the merger or acquisition and that engages in no other business activities.
Article 4: For the purposes of these Guidelines, the term “M&A Loan” means a loan extended by a commercial bank to an acquiring party or its Subsidiary for the purpose of paying the price and expenses for the merger or acquisition transaction.
Article 5: A commercial bank with legal personality that engages in the M&A Loan business shall satisfy the following conditions:
(1) having sound risk management and effective internal control mechanisms;
(2) having a capital adequacy ratio of not less than 10%;
(3) all of its other regulatory metrics satisfying regulatory requirements; and
(4) having professional teams to conduct due diligence and risk assessments in connection with M&A Loans.
Before engaging in the M&A Loan business, a commercial bank shall formulate an M&A Loan business procedure and internal control system and report the same to the regulator. If, after commencing the M&A Loan business, a situation arises that makes it impossible for a commercial bank to continue satisfying any of the foregoing conditions, it shall cease to handle new M&A Loans.
Article 6: A commercial bank engaging in the M&A Loan business shall comply with the principles of lawfulness, compliance, prudent operations, controllable risk and commercial sustainability.
Article 7: A commercial bank shall formulate an M&A Loan business development strategy, fully consider state industrial, land, environmental protection and other such relevant policies, specify the objectives, customer scope, risk bearing limit and the main risk features of developing the M&A Loan business and reasonably satisfy the demand of enterprises for financing mergers and restructurings.
Article 8: A commercial bank shall, in line with the principle of management intensity greater than that for other types of loans, establish appropriate M&A Loan management systems and a management information system and ensure that the business procedures, internal control systems and management information system can effectively identify, weigh, monitor and control M&A Loan risks.
A commercial bank shall establish an M&A Loan statistics system in accordance with regulatory requirements, and duly carry out work such as keeping statistics on, collation and analysis of M&A Loans.
Article 9: The China Banking Regulatory Commission and its agencies shall regulate the M&A Loan business of commercial banks in accordance with the law, and if they discover that a commercial bank does not satisfy the conditions for engaging in the business or violates relevant provisions hereof, and thus cannot effectively control M&A Loan risks, they may take regulatory measures such as ordering it to suspend its M&A Loan business in accordance with relevant laws and regulations.
Part Two: Risk Assessment
Article 10: A commercial bank shall assess M&A Loan risks on the basis of a comprehensive analysis of the various risks attaching to mergers and acquisitions, such as strategic risks, legal and compliance risks, integration risks, business risks and financial risks. If a merger or acquisition involves a cross-border transaction, the commercial bank shall additionally analyse the country risks, exchange rate risks and the risks inherent when funds cross borders.
Article 11: When assessing strategic risks, a commercial bank shall carry out analysis from the perspective of the industry prospects, market structure, business strategies, management teams, corporate cultures, shareholder support of the parties to the merger or acquisition, etc., including, without limitation, the following:
(1) the degree of complementarity of the industries of and the degree of correlation in the strategies of the parties to the merger or acquisition, as well as the synergies that may arise;
(2) the chances that the parties to the merger or acquisition may derive additional returns from their strategies, management, technologies and market integration, etc.;
(3) the anticipated strategic successes and the source of the dynamism for corporate value increase after the merger or acquisition;
(4) the probability that the new management team will achieve its strategic objectives after the merger or acquisition;
(5) the speculative nature of the merger or acquisition and countermeasures for controlling the attendant risks; and
(6) if the synergies are not realised, the risk control measures or withdrawal strategies that the acquiring party may take.
Article 12: When assessing the legal and compliance risks, a commercial bank shall analyse, without limitation, the following:
(1) whether the parties to the merger or acquisition have the qualifications to be entities to merger and acquisition transactions;
(2) whether, based on relevant provisions, the merger or acquisition transaction has been or will be approved, and whether registration, announcement and other such necessary procedures have been or will be carried out;
(3) whether laws and regulations place restrictions on the source of funds for the merger or acquisition transaction;
(4) whether the legal structure of the security is lawful and valid and whether the necessary statutory procedures have been carried out;
(5) whether the borrower's control of the cash flow for repayment is lawful and compliant;
(6) whether the lender's rights are accorded effective legal protection; and
(7) other compliance aspects relating to the merger or acquisition or the financing or legal structure of the merger or acquisition.
Article 13: When assessing the integration risks, a commercial bank shall, without limitation, analyse whether the parties to the merger or acquisition have the capacity to realise synergies through the integration of the following:
(1) their development strategies;
(2) organisations;
(3) assets;
(4) business; and
(5) human resources and cultures.
Article 14: When assessing business and financial risks, a commercial bank shall, without limitation, analyse the following:
(1) the major business risks that the enterprise will face after the merger or acquisition, e.g. whether industry development and market share will remain stable or in a growth trend, whether corporate governance will be effective, whether the management team will be stable and whether it has sufficient capabilities, whether the technology is mature and can enhance corporate competitiveness and whether financial management will be effective, etc.;
(2) the future cash flow of the parties to the merger or acquisition and the degree of stability thereof;
(3) the risk that the pricing of the target equity (assets) is higher than the rationally estimated value of the equity (or assets) of the target enterprise;
(4) the dividend distribution strategies of the parties to the merger or acquisition and the impact that they have on the source of the funds to be used to repay the M&A Loan;
(5) the debt financing instruments used in the merger or acquisition and the impact that they have on the source of the funds to be used to repay the M&A Loan; and
(6) the impact of changes in factors such as exchange rate and interest rate on the source of the funds to be used to repay the M&A Loan.
A commercial bank shall, by comprehensively considering the foregoing risk factors and based on the business and financial positions of the merger or acquisition transaction parties, the merger or acquisition transaction financing method and amount, etc., reasonably calculate the source for repayment of the M&A Loan, prudently determine the financial leverage ratio of the merger or acquisition project supported by the M&A Loan, ensure that the source of funds for the merger or acquisition transaction contains a reasonable percentage of equity-type funds and guard against the risks that highly leveraged merger or acquisition financing poses.
Article 15: On the basis of a comprehensive analysis of the various risks attaching to an merger or acquisition, a commercial bank shall establish a prudent financial model, and estimate the merger or acquisition transaction parties' future financial data and the key financial leverage and debt service capacity indicators that will have a material impact on the M&A Loan risks.
Article 16: On the basis of the financial model estimates, the commercial bank shall fully consider the impact of various adverse circumstances on M&A Loan risks. Adverse circumstances shall include but not be limited to the following:
(1) during the repayment period, the business performance of the parties to the merger or acquisition (including cash flow) fails to remain stable or in a growth trend;
(2) the governance structure of the parties to the merger or acquisition is unsound, or their management teams are unstable or incompetent;
(3) after the merger or acquisition, the synergies between the acquiring party and the target enterprise fail to materialise; or
(4) an affiliated relationship exists between the acquiring party and the target enterprise, in particular, the acquiring party and the target enterprise are both controlled by the same de facto controller.
Article 17: On the basis of a comprehensive assessment of the M&A Loan risks, a commercial bank shall confirm the genuineness of the merger or acquisition transaction, arrive at an overall determination of whether the borrower's source of funds for repayment is sufficient, whether there is a match between the repayment source and the repayment schedule, whether the borrower is capable of paying the loan interest and principal in accordance with the contract, etc., propose countermeasures or a withdrawal strategy that it can take in the event that the quality of the M&A Loan declines, and conclude with a loan assessment report.
Part Three: Risk Management
Article 18: The balance of all the M&A Loans of a commercial bank shall not account for more than 50% of its Tier 1 net capital for the same period.
Article 19: A commercial bank shall, on the basis of its M&A Loan business development strategy, establish an appropriate limit control system for M&A Loan concentration classified respectively by individual borrower, enterprise group customer, industry category and country or region, and report the same to the China Banking Regulatory Commission or its agency.
Article 20: The balance of a commercial bank's M&A Loans to one borrower shall not account for more than 5% of its Tier 1 net capital during the same period.
Article 21: M&A Loans shall not account for more than 60% of the price for a merger or acquisition transaction.
Article 22: In general, the term of an M&A Loan shall not exceed seven years.
Article 23: A commercial bank shall have professional personnel familiar with relevant legal, financial, industry and other such knowledge that is appropriate to the scale and the degree of complexity of its M&A Loan business.
Article 24: A commercial bank shall internally arrange for the formation of a professional team for due diligence and risk assessment of M&A Loans to investigate, analyse and assess the information specified in Articles 11 to 17 hereof and produce written reports thereon.
The person in charge of the professional team mentioned in the preceding paragraph shall have at least three years' experience in mergers and acquisitions, and the members of the team shall include but not be limited to merger and acquisition experts, credit experts, industry experts, legal experts and financial experts.
Article 25: A commercial bank shall strengthen professional management and control at each of the main stages of its M&A Loan business, including business acceptance, due diligence, risk assessment, execution of contracts, loan disbursement, post-loan management, etc., and in its internal control system.
Article 26: The M&A Loan applications accepted by a commercial bank shall satisfy the following basic conditions:
(1) the acquiring party is operating lawfully and compliantly, has a good credit position and does not have a record of credit default, evasion of bank liabilities, etc.;
(2) the merger or acquisition transaction is lawful and compliant and, if matters such as state industrial policy, industry access, anti-monopoly considerations, state-owned asset transfer, etc. have a bearing thereon or are involved, the approval of the relevant authorities has been obtained and the relevant procedures have been carried out in accordance with relevant laws, regulations and policy requirements; and
(3) there is a relatively high degree of complementarity of the industries of or a relatively high degree of correlation in the strategies of the acquiring party and the target enterprise, and the acquiring party, through the merger or acquisition, will be able to acquire the target enterprise's research and development capabilities, key technologies and processes, trademarks, franchises, supply or distribution network and other such strategic resources in order to strengthen its core competitiveness.
Article 27: A commercial bank may, depending on the complexity, specialised nature and technical nature of a merger or acquisition transaction, engage an intermediary firm to conduct the relevant investigation and use such intermediary firm's investigation report when carrying out its risk assessment.
If the circumstance specified in the preceding paragraph applies, the commercial bank shall establish an appropriate intermediary firm management system and specify the intermediary firm's legal liability in a written contract.
Article 28: Where there is an affiliated relationship between the acquiring party and the target enterprise, a commercial bank shall strengthen its pre-loan investigation, understand and familiarise itself with relevant matters such as the economic motive for the merger or acquisition transaction, the feasibility of integration of the merger or acquisition transaction parties and the potential for synergy, verify the genuineness of the merger or acquisition transaction and the reasonableness of the merger or acquisition transaction price, and guard against the use by the affiliated enterprises of a fraudulent merger or acquisition transaction to fraudulently obtain bank financing proceeds.
Article 29: A commercial bank shall, in principle, require a borrower to provide security, including but not limited to an asset mortgage, equity pledge, third party guarantee or other legally compliant form of security, sufficient to cover the M&A Loan risks. If security is provided in the form of a pledge of the target enterprise's equity, the commercial bank shall adopt a more prudent method to assess the value of its equity and determine the pledge ratio.
Article 30: A commercial bank shall prudently determine basic terms of the loan contract such as the loan amount, term, interest rate, repayment schedule and security method on the basis of the outcome of its risk assessment of the M&A Loan.
Article 31: The key terms that a commercial bank sets forth in a loan contract to protect the lender's interests shall include but not be limited to:
(1) terms constraining the major financial indicators of the borrower or the post-merger or acquisition enterprise;
(2) mandatory terms obliging the borrower to apply any additional cash flow obtained by it under specific circumstances to prepaying the loan;
(3) terms on monitoring the main or dedicated account(s) of the borrower or post-merger or acquisition enterprise; and
(4) undertakings by the borrower to ensure the lender's right to be informed of or approve material matters.
Article 32: A commercial bank shall, through the key terms specified in Article 31 hereof, specify the risk control measures it can take if any of the following circumstances should come to apply to the merger or acquisition transaction parties:
(1) a change in a major shareholder;
(2) a material change in the business strategy;
(3) a change in a major investment project;
(4) an irregular change in operating costs;
(5) a material adverse change in brand, customers, market channels, etc.;
(6) the arising of a new material liability or security provided for a third party;
(7) a sale of material assets;
(8) a material change in the profit sharing strategy;
(9) a material change in the guarantor's capacity to provide security or in the mortgaged or pledged property; or
(10) another material matter that affects the enterprise as an ongoing concern.
Article 33: In the loan contract, the commercial bank shall specify the drawdown conditions and terms relating to the payment and use of the loan. The drawdown conditions shall, at minimum, include conditions such as the full and successful raising of the funds that were to be raised by the acquiring party itself and the satisfaction of the compliance conditions of the merger or acquisition.
Pursuant to the loan contract, the commercial bank shall strengthen its management of the drawdown and takedown of the loan proceeds, duly monitor the flow of the proceeds, guard against the affiliated enterprises taking advantage of a fraudulent merger or acquisition transaction to fraudulently obtain loan proceeds and ensure that the loan proceeds are not diverted.
Article 34: A commercial bank shall specify in the loan contract that the borrower is under obligation, during the term of the loan, to regularly submit the financial statements of the parties to the merger or acquisition and the guarantor and other relevant information required by the lender.
Article 35: A commercial bank shall, during the life of a loan, strengthen post-loan inspections, keep abreast of the implementation of the merger or acquisition transaction in a timely manner, regularly assess the predictability and stability of the future cash flow of the merger or acquisition transaction parties, regularly assess whether the borrower's repayment plan and the repayment source are in agreement and, if an irregularity should arise in the merger or acquisition transaction or in respect of the merger or acquisition transaction parties, take effective measures to ensure the security of the loan in a timely manner.
Where there is an affiliated relationship between the acquiring party and the target enterprise, a commercial bank shall intensify its post-loan management, in particular confirming that the merger or acquisition transaction was actually carried out and that the acquiring party genuinely carried out the integration of the target enterprise.
Article 36: During the life of a loan, the commercial bank shall pay close attention to the performance of the key terms of the loan contract.
Article 37: A commercial bank shall carry out a risk classification and make provisions for M&A Loans at a frequency and at rates no lower than those for other types of loans.
Article 38: When an M&A Loan becomes non-performing, a commercial bank shall, in a timely manner, take risk control measures such as loan recall, preservation measures, disposal of the mortgaged or pledged property and taking over in accordance with the law the operations of the enterprise.
Article 39: A commercial bank shall specify the contents of, pathway for and frequency of internal M&A Loan business reports and conduct internal inspections and independent internal audits of the compliance of its M&A Loan business and change in asset values at least once per year and carry out a comprehensive assessment of its risk position. In the event of a trend toward high concentration and down-grading of loan risk categories, etc. of M&A Loans, a commercial bank shall increase the frequency of internal reports, inspections and assessments.
Article 40: When the amount or ratio of non-performing M&A Loans is on the rise, a commercial bank shall strengthen its reporting, inspection and assessment of the following:
(1) the method, constitution and loan principal and interest coverage of security provided for M&A Loans;
(2) the recall and preservation measures taken in respect of non-performing loans;
(3) disposal of pledged equity;
(4) the taking over of the operations of enterprises in accordance with the law; and
(5) the writing-off of defaulted M&A Loans.
Part Four: Supplementary Provisions
Article 41: These Guidelines shall apply where an acquiring enterprise that has secured control of the target enterprise with the support of a commercial bank loan acquires or subscribes for equity in the target enterprise in order to maintain its control over the target enterprise.
Article 42: Where a policy bank, branch of a foreign bank or finance company of an enterprise group engages in M&A Loan business, matters shall be handled with reference to these Guidelines.
Article 43: For the purposes of these Guidelines, the term “parties to a merger or acquisition” means the acquiring party and the target enterprise.
Article 44: The China Banking Regulatory Commission is in charge of interpreting these Guidelines.
Article 45: These Guidelines shall be effective as of the date of issuance. The China Banking Regulatory Commission, Circular on the Issuance of the <Guidelines for Risk Management by Commercial Banks of Loans Extended for Mergers and Acquisitions> (Yin Jian Fa [2008] No.84) shall be repealed simultaneously.
clp reference:3610/15.02.10prc reference:银监发〔2015〕5号promulgated:2015-02-10effective:2015-02-10This premium content is reserved for
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