 
Chinese lenders need panel for debt for equity swaps, says bank

Chinese lenders are in need of a framework to coordinate debt-for-equity swaps, China Construction Bank (CCB) has said. Chairman Wang Hongzhang said the panel is necessary because the debt structures of some firms are "very complicated". The bank itself is currently waiting for government approval for a CNY12bn ($1.75bn) fund for buying out bad loans. The Chinese government is trying to cut corporate debt by CNY120tn ($18tn) in a bid to support the Chinese financial system. CCB played a leading role in its latest clean-up of bad loans, swapping nearly CNY5bn with Yunnan Tin Group for a stake in the large metal producer.

The comments from Wang Hongzhang, chairman of the second-largest Chinese lender by assets China Construction Bank, which is awaiting government approval for a 12 billion yuan fund for buying out bad loans, underscore the challenges facing the Chinese government’s programme to cut corporate debt by 120 trillion yuan to preserve the country’s financial system. Photo: Reuters