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Credit line to ease M&A deals

CHINA Merchants Bank yesterday signed an agreement with Shanghai United Assets and Equity Exchange for an annual credit line of 5 billion yuan (US$732 million) to smooth merger and acquisition deals.

The Shanghai branch of the bank will offer credit to facilitate M&A deals through the exchange. The bank will also offer services such as settlement, case analysis and consultation.

"Our bank has set up a team to work on M&A credit since it was allowed by regulators at the end of 2008," the Shenzhen-based bank said yesterday. The bank views Shanghai as one of its major markets to offer credit for M&A transactions as it taps the local economy.

Banks in China were permitted in December to offer loans for M&As for the first time since 1996 in a bid to spur corporate activities amid a global financial crisis that has dried up funds for takeovers in several developed economies.

Such loans were previously banned because the regulator was concerned many banks would be saddled with bad debts from the days of frenzy ill-advised lending to firms with poor balance sheets.

Other banks, including Huaxia Bank, the Bank of Shanghai and the Industrial and Commercial Bank of China, have already teamed up with the Shanghai exchange to offer credit for M&A deals.


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