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Quick Take: Regulator Sweetens Debt-for-Equity Swaps

Photo: VCG
Photo: VCG

China’s banking regulator is trying to make debt-for-equity swaps more palatable for banks by giving them a greater incentive to participate in one of Beijing’s measures for getting corporate debt under control, Reuters has reported.

The China Banking and Insurance Regulatory Commission (CBIRC) will allow banks to reduce to the risk weighting on equity of listed companies that they have received through debt-for-equity swaps to 250%, Reuters reported on Thursday, citing an internal notice provided by anonymous sources. However, banks will still have to use a risk weighting of 400% on equity in unlisted companies.

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