China allows banks to conduct acquisition loans

BEIJING, Dec. 9-- Commercial banks in China gained the right to provide loans to domestic enterprises conducting acquisition both at home and abroad, the country's top banking regulator announced here on Tuesday.

"The move will enhance the banking sector's role in supporting economic growth by helping domestic companies raise capital," said the China Banking Regulatory Commission (CBRC) in an on-line article.

CBRC went on to say capital shortage had created a bottleneck for companies wishing to do acquisition.

These new loans will help business expansion amid the global financial crisis.

Commercial banks nationwide must meet certain criteria to initiate the business, including a capital adequacy ratio above 10percent and a loan loss provision taking up more than one percent of the total loan, among others.

An effective risk control capability and experts on acquisition assessment are also required, according to the CBRC.

The new regulation applies to both domestic urban and rural commercial banks and foreign banks in the country. 

(Source: English Site of Department of Information Technology)