CBRC Revised Guidelines on Acquisition Financing in China

Since the Guidelines on Risk Management of Merger and Acquisition Loans granted by Commercial Banks (商业银行并购贷款风险管理指引) (the "Guidelines") came into force in 2008, banks in China have not responded to the increasing demand of M&A loans from PRC borrowers and the offshore market continued to be the primary financing source for PRC borrowers to fund their outbound acquisitions. Such lack of interest in M&A loans among PRC banks is partly a consequence of the strict qualification and lending rules under the Guidelines.

After more than six years of implementation and experiment, the China Banking Regulatory Commission (the "CBRC") recently revised the Guidelines with a view to facilitating the development of the M&A loan market in China.

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