On December 31, the National Financial Regulatory Administration issued a notice regarding the printing and distribution of the "Commercial Bank M&A Loan Management Measures."
The measures stipulate that a single acquirer that has already obtained control of a target enterprise may apply for a control-type M&A loan to maintain or enhance its control by transferring or subscribing to shares of the target enterprise, provided that the single acquisition of the target enterprise's equity ratio is not less than 5%. An equity-participation-type M&A loan refers to a loan that supports a single acquirer in taking a stake in a target enterprise without achieving control, but the single acquisition of the target enterprise's equity ratio must not be less than 20%. If a single acquirer already holds 20% or more of the equity in a target enterprise and seeks to further increase its stake without achieving control, it may apply for an equity-participation-type M&A loan, but the single transfer or subscription of equity ratio must not be less than 5%.
Simultaneously, if M&A loans are used to replace merger and acquisition consideration paid upfront by the acquirer, they must meet all requirements of these measures regarding the minimum proportion of equity funds, and must not be used to replace already obtained M&A loans. The interval between the first loan drawdown and the completion of payment for the entire M&A transaction consideration to be replaced must not exceed one year.
Commercial banks should strengthen post-disbursement management of loan funds, promptly track the implementation of the merger or acquisition, closely monitor the fulfillment of key clauses in the loan agreement, and monitor risk factors affecting the borrower's debt repayment capacity. They must strictly guard against misappropriation of borrower funds and practices such as affiliated enterprises obtaining loan funds through fictitious M&A transactions. If abnormalities are detected, timely measures should be taken, such as requiring additional collateral, adjusting loan disbursement conditions or repayment plans, freezing or terminating credit lines, or recalling loans early.
The original text is as follows: Notice of the National Financial Regulatory Administration on Printing and Distributing the "Commercial Bank M&A Loan Management Measures" To all local financial regulatory bureaus, all policy banks, large banks, joint-stock banks, and foreign banks: The "Commercial Bank M&A Loan Management Measures" are hereby issued to you and should be implemented accordingly. National Financial Regulatory Administration, December 31, 2025 (This document is distributed to financial regulatory sub-bureaus, local corporate bank institutions, foreign bank branches, and enterprise group finance companies).
Commercial Bank M&A Loan Management Measures Article 1: These Measures are formulated in accordance with laws and regulations such as the "Banking Supervision and Administration Law of the People's Republic of China" and the "Commercial Bank Law of the People's Republic of China" to standardize the operational conduct of commercial bank M&A loans, improve M&A loan risk management capabilities, and strengthen support for economic restructuring and resource optimization.
Article 2: These Measures apply to commercial banks established according to law within the territory of the People's Republic of China.
Article 3: M&A loans referred to in these Measures are loans granted by commercial banks to domestic acquiring enterprises or their subsidiaries for paying M&A transaction consideration and expenses. The term "subsidiary" in the preceding paragraph refers to a wholly-owned or controlled subsidiary primarily engaged in investment management for the acquirer.
Article 4: M&A loans are used to support domestic acquiring enterprises in achieving actual control, merger, or equity participation in an established and ongoing target enterprise or asset through means such as transferring existing equity, subscribing to new equity, acquiring assets, or assuming liabilities. They are categorized by purpose into control-type M&A loans and equity-participation-type M&A loans: (1) Control-type M&A loans support a single acquirer or multiple acquirers in a concerted action relationship to obtain control of a target enterprise or asset. A single acquirer that has already obtained control of a target enterprise may apply for a control-type M&A loan to maintain or enhance its control by transferring or subscribing to shares of the target enterprise, but the single acquisition of the target enterprise's equity ratio must not be less than 5%. (2) Equity-participation-type M&A loans support a single acquirer in taking a stake in a target enterprise without achieving control, but the single acquisition of the target enterprise's equity ratio must not be less than 20%. If a single acquirer already holds 20% or more of the equity in a target enterprise and seeks to further increase its stake without achieving control, it may apply for an equity-participation-type M&A loan, but the single transfer or subscription of equity ratio must not be less than 5%.
Article 5: Commercial bank corporate entities conducting M&A loan business must meet the following conditions: (1) Good operating condition and sound corporate governance; (2) Possess a professional team for conducting M&A due diligence and risk assessment; (3) A good regulatory rating for the previous year, with major regulatory indicators meeting regulatory requirements; (4) The adjusted on-and-off-balance-sheet asset balance on a consolidated basis at the end of the previous year is not less than RMB 50 billion; for conducting equity-participation-type M&A loan business, the adjusted on-and-off-balance-sheet asset balance on a consolidated basis at the end of the previous year is not less than RMB 100 billion. Before commencing M&A loan business, commercial banks shall formulate corresponding business processes and internal control systems and file them with the National Financial Regulatory Administration or its local offices.
Article 6: Commercial banks shall establish sound M&A loan management mechanisms and information systems, formulate M&A loan management policies and procedures, and effectively identify, monitor, assess, mitigate, and control M&A loan risks.
Article 7: Commercial banks conducting M&A loan business shall adhere to the principles of legal and regulatory compliance, prudent operation, controllable risk, and commercial sustainability.
Article 8: M&A loan applications accepted by commercial banks shall meet the following basic conditions: (1) The acquirer operates legally and compliantly, has a good credit status, no record of evading bank debts, and no adverse records such as credit defaults in the past three years; (2) The target enterprise or asset should have good commercial value and can bring reasonable economic returns to the acquirer; (3) There is a high degree of industrial relevance or strategic synergy between the acquirer and the target enterprise, conducive to promoting integration and restructuring, optimizing industrial layout, or transitioning and upgrading towards new quality productive forces; (4) If the M&A transaction involves matters such as national industrial policy, industry access, anti-monopoly, or state-owned asset transfer, it shall obtain approvals from relevant authorities and complete relevant procedures in accordance with applicable laws, regulations, and policy requirements.
Article 9: The professional team responsible for M&A loan due diligence and risk assessment at a commercial bank shall investigate, analyze, and assess the contents of Articles 10 to 20 of these Measures and produce a written report. The head of the professional team referred to in the preceding paragraph shall have at least three years of experience in M&A; team members include, but are not limited to, M&A experts, credit experts, industry experts, legal experts, and financial experts. The head of the professional team for equity-participation-type M&A loans shall have at least five years of experience in M&A.
Article 10: When conducting due diligence, commercial banks shall comprehensively cover relevant circumstances of both parties to the merger or acquisition, including but not limited to the commercial value, potential returns, and valuation level of the target enterprise or asset; the shareholder structure, corporate governance, operating condition, financial situation, and overall creditworthiness of both parties; and the compliance of the M&A transaction. If guarantees are involved, the guarantor's capability and the value of collateral or pledged assets shall be thoroughly investigated.
Article 11: Based on a comprehensive analysis of various risks related to the merger or acquisition, such as strategic risk, legal and compliance risk, integration risk, and operational and financial risk, commercial banks shall prudently assess the risk of the M&A loan, focusing on evaluating the borrower's debt repayment capacity, while also paying attention to the development prospects, synergy effects, and operational efficiency of the target enterprise post-merger, and comprehensively assessing their impact on the M&A loan. For cross-border transactions, country risk, exchange rate risk, and fund transit risk shall also be analyzed.
Article 12: When assessing a borrower's debt repayment capacity, commercial banks shall comprehensively consider various financial indicators, including but not limited to profitability, asset quality condition, asset-liability structure, and cash flow situation. Commercial banks shall also analyze and assess the borrower's non-financial factors, including but not limited to corporate governance, performance record, production equipment and technical capability, products and market, industry characteristics, and macroeconomic environment, to ensure the borrower possesses good repayment capacity and willingness.
Article 13: When assessing strategic risk, commercial banks shall analyze from aspects such as the business strategies, management teams, and synergy effects of both parties to the merger or acquisition, including but not limited to the following: (1) The industrial relevance and strategic synergy between the parties, potential synergy effects, expected strategic outcomes, and opportunities for obtaining additional returns; (2) The likelihood of the new management team achieving new strategic goals post-merger; (3) Risk control measures or exit strategies the acquirer might adopt if synergy effects fail to materialize.
Article 14: Commercial banks shall assess legal and compliance risks, including but not limited to: (1) Whether all parties to the M&A transaction possess the requisite qualifications, have obtained or will obtain approvals as required, and have completed necessary resolutions, registrations, announcements, etc., and whether the transaction is legal and valid; (2) The legality and compliance of the borrower's funding sources for paying the M&A transaction consideration and the control over repayment cash flows; (3) Compliance in other aspects related to the M&A transaction, legal structure of the M&A financing, and the plan.
Article 15: Commercial banks shall assess integration risk, including but not limited to analyzing whether both parties have the capability to achieve synergy through integration in the following areas: (1) Development strategy integration; (2) Organizational, human resource, and cultural integration; (3) Business integration; (4) Asset integration.
Article 16: Commercial banks shall assess operational and financial risks, including but not limited to: (1) Major risks in the operation of the enterprise post-merger, such as whether industry development and market share can remain stable or show growth trends, whether corporate governance is effective, whether the management team is stable and sufficiently capable, whether technology is mature and can enhance competitiveness, and whether financial management is effective; (2) The future cash flows of both parties and their stability, dividend policies and their impact on M&A loan repayment; (3) The risk that the pricing of the acquired equity (or assets) exceeds the reasonable valuation of the target enterprise's equity (or assets).
Article 17: Based on a comprehensive analysis of various risks related to the merger or acquisition, and according to the operating and financial conditions of both parties, the M&A financing method and amount, etc., commercial banks shall establish prudent financial models to project future financial data for both parties and key financial leverage and debt repayment capacity indicators that significantly impact M&A loan risk.
Article 18: Based on financial model projections, commercial banks shall conduct scenario analysis and stress testing, fully considering the impact of various adverse scenarios on M&A loan risk. Adverse scenarios include but are not limited to: (1) Adverse changes in the macroeconomy, concentrated defaults in the industry, downgrades in the credit ratings of both parties; (2) The operating performance (including cash flow) of both parties fails to remain stable or show growth trends during the repayment period; (3) Synergy effects fail to materialize between the acquirer and the target enterprise post-merger.
Article 19: If an affiliated relationship exists between the acquirer and the target enterprise, commercial banks shall strengthen pre-loan investigation, understand and grasp relevant situations such as the economic motivation for the transaction, the feasibility of integration between the parties, and the possibility of achieving synergies, verify the authenticity of the M&A transaction and the reasonableness of the transaction price, and prevent affiliated enterprises from using fictitious M&A transactions to obtain bank credit funds.
Article 20: In principle, commercial banks shall require borrowers to provide collateral sufficient to cover the risk of the M&A loan, including but not limited to asset mortgages and equity pledges, as well as other forms of guarantee conforming to legal provisions. When accepting target enterprise equity as pledge, commercial banks shall adopt more prudent methods to assess its value and determine the pledge ratio.
Article 21: Commercial banks shall conduct thorough due diligence and risk assessment, confirm the authenticity of the M&A transaction and the reasonableness of the M&A loan application, comprehensively judge the borrower's repayment capacity and the profitability of the post-merger enterprise, and form loan approval opinions.
Article 22: Based on the M&A loan risk assessment results and comprehensively considering service costs and benefits, commercial banks shall reasonably determine the contents of basic terms in the loan agreement, such as loan amount, term, interest rate, installment repayment plan, and collateral method.
Article 23: Commercial banks shall include key clauses in the loan agreement to protect their own interests, including but not limited to: (1) The borrower's obligation to regularly submit financial statements of both parties to the merger/acquisition and the guarantor, as well as other information required by the commercial bank, and to continuously satisfy the bank's binding clauses on the borrower's important financial indicators; (2) The commercial bank's right to be informed of or approve major changes involving the equity, operations, finance, and investment/financing of both parties, and the right to take risk control measures in response to major adverse changes; (3) Conditions for M&A loan drawdown and fund usage, as well as measures necessary for the commercial bank to monitor fund flows, such as account monitoring and document collection.
Article 24: Comprehensively considering the risks of the M&A transaction and the M&A loan, commercial banks shall prudently determine the proportion of the M&A loan to the total M&A transaction consideration, ensuring that the M&A funds contain a reasonable proportion of equity funds to prevent high-leverage M&A financing risks. The proportion of control-type M&A loans to the M&A transaction consideration shall not exceed 70%, and the proportion of equity funds shall not be less than 30%. The proportion of equity-participation-type M&A loans to the M&A transaction consideration shall not exceed 60%, and the proportion of equity funds shall not be less than 40%.
Article 25: The term for control-type M&A loans shall in principle not exceed ten years, and the term for equity-participation-type M&A loans shall in principle not exceed seven years.
Article 26: Before loan disbursement, commercial banks shall confirm that the borrower meets the drawdown conditions stipulated in the contract. Drawdown conditions shall at least include that other M&A transaction funds besides the M&A loan have been fully provided according to the agreed payment schedule, and that M&A transaction compliance conditions have been met. In principle, entrusted payment should be used for M&A loans applied for by borrowers to pay M&A transaction consideration; if entrusted payment is truly not feasible, necessary measures must be taken to ensure the legality and compliance of fund usage.
Article 27: If M&A loans are used to replace merger and acquisition consideration paid upfront by the acquirer, they must meet all requirements of these Measures regarding the minimum proportion of equity funds, and must not be used to replace already obtained M&A loans. The interval between the first loan drawdown and the completion of payment for the entire M&A transaction consideration to be replaced must not exceed one year.
Article 28: Commercial banks shall strengthen post-disbursement management of loan funds, promptly track the implementation of the merger or acquisition, closely monitor the fulfillment of key clauses in the loan agreement, and monitor risk factors affecting the borrower's debt repayment capacity. They must strictly guard against misappropriation of borrower funds and practices such as affiliated enterprises obtaining loan funds through fictitious M&A transactions. If abnormalities are detected, timely measures should be taken, such as requiring additional collateral, adjusting loan disbursement conditions or repayment plans, freezing or terminating credit lines, or recalling loans early.
Article 29: The balance of M&A loans to a single borrower for a commercial bank shall not exceed 2.5% of the bank's net tier 1 capital for the same period. The total balance of all M&A loans for a commercial bank shall not exceed 50% of the bank's net tier 1 capital for the same period. The balance of equity-participation-type M&A loans shall not exceed 30% of the bank's total M&A loan balance.
Article 30: According to their M&A loan business development strategy, commercial banks shall establish corresponding limit control systems for M&A loan concentration by single borrower, group client, industry category, and country or region. Commercial banks may adopt syndicated loan forms to control client concentration and reasonably disperse risk.
Article 31: The National Financial Regulatory Administration and its local offices may impose prudential regulatory requirements on commercial bank M&A loan management based on the bank's operational management condition, risk level, and M&A loan business development. If a commercial bank is found not to meet business commencement conditions or to violate relevant provisions of these Measures and cannot effectively control M&A loan risks, the National Financial Regulatory Administration and its local offices may take regulatory measures or impose administrative penalties in accordance with relevant laws and regulations.
Article 32: Policy banks, foreign bank branches, and enterprise group finance companies conducting M&A loan business shall refer to these Measures for implementation.
Article 33: The National Financial Regulatory Administration is responsible for interpreting these Measures.
Article 34: These Measures take effect from the date of issuance. The "Notice of the China Banking Regulatory Commission on Printing and Distributing the 'Commercial Bank M&A Loan Risk Management Guidance'" (Yin Jian Fa [2015] No. 5) is simultaneously repealed.
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