Resolving excess capacity, CBRC relaxed M&A loan policy

M&A loans are one of the financing channels for promoting mergers and acquisitions. On March 12, the CBRC revised the “Guidelines for Risk Management of M&A Loans of Commercial Banks” and relaxed some of the policy constraints to better resolve excess capacity.

At present, the downward pressure on the economy has increased. Due to the influence of the overcapacity industry, the bank's non-performing assets have gradually increased. "Promoting industrial integration through mergers and acquisitions has become the consensus of regulators and various market players." Liu Jin, general manager of ICBC's investment banking department, said. Liu Yong, director of the CDB Business Development Bureau, pointed out that shifting excess capacity through “going out” can also increase the competitiveness of domestic enterprises.

With this adjustment, the CBRC will focus on loosening the conditions for M&A loans. Specifically, the first is to moderately extend the term of the M&A loan. The revision will extend the term of M&A loans from 5 years to 7 years, which is more in line with the actual situation of M&A transactions. “The investment return period of different M&A projects is different, and the integration of some M&A projects is more complicated, resulting in a longer synergy effect.” The relevant person in charge of the China Banking Regulatory Commission explained.

The second is to moderately increase the proportion of M&A loans. The revision will increase the proportion of M&A loans to M&A transaction prices from 50% to 60%.

In addition, the CBRC also moderately adjusted the M&A loan guarantee requirements. Previously, the CBRC required M&A loans to be guaranteed, and the guarantee conditions were higher than the general loans; the amendments revised the mandatory provisions of the guarantees into principled provisions, and deleted the guarantee conditions should be higher than other types of loans, allowing commercial On the premise of preventing the risk of M&A loans, the bank reasonably determines the guarantee conditions according to the risk status of the M&A project and the credit status of the M&A enterprise.

In general, M&A loans are not the main business of banks, accounting for less than 1% of total loans. According to the China Banking Regulatory Commission, as of September 2014, the NPL ratio was only 0.25%. Liu Jin pointed out that ICBC's M&A loans include integration with the capital market, helping companies to merge and re-list, and focusing on supporting a number of major shareholders' fixed-income projects, actively adopting tools such as merger funds and mergers and acquisitions, and even taking advantage of ICBC's wealth management funds. , properly do a part of the investment to provide a comprehensive solution for the enterprise.

The China Banking Regulatory Commission also pointed out that M&A loans should strengthen risk prevention and control. First, strengthen the risk of prevention and control of financial leverage. According to the operation and financial status of the M&A parties, the financing method and amount of M&A, etc., reasonably measure the source of repayment of M&A loans, carefully determine the financial leverage ratio of M&A projects supported by M&A loans, and ensure that the sources of funds for M&A contain a reasonable proportion of equity. funds.

At the same time, we must strengthen the prevention of false mergers and acquisitions. Strengthen pre-lending investigations, verify the authenticity of M&A transactions and the rationality of M&A transaction prices, strengthen the withdrawal and payment management of loan funds, do a good job of monitoring the flow of funds, and prevent the use of false M&A transactions between affiliated companies to obtain bank credit funds. the behavior of.

In addition, we must strengthen the improvement of the M&A loan statistics system. Establish a statistical system for M&A loans in accordance with regulatory requirements, and do a good job in statistics, aggregation, and analysis of M&A loans.

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