Bank insurance

Chinese central bank insurance authorities encourage mergers and acquisitions of real estate projects

The photo taken on May 16, 2016 shows a real estate project in Hangzhou, capital of east China’s Zhejiang Province. Photo: Xinhua

The People’s Bank of China (PBC) and the China Insurance Regulatory Commission (CIRC) have issued a notice encouraging banking and financial institutions to provide financial support and services for mergers and acquisitions of key real estate companies to dissolve the risks, Shanghai Security News reported on Monday.

The notice aimed to encourage high-quality real estate companies to merge or acquire high-quality projects from large real estate companies that have encountered risk management and operational difficulties.

The move aims to “downsize” property companies that are poorly managed and not yet on the verge of bankruptcy in order to prevent and resolve the risks, according to the article, citing people familiar with the matter.

The opinion also stressed that banking financial institutions should provide M&A lending services in a managed and orderly manner, in accordance with the principles of legal compliance, controllable risks and sustainability of the business.

The PBC and CIRC also held a meeting on Promoting Stable and Orderly M&A Lending Activities with Big Banks. The meeting called on banks to avoid indiscriminately withdrawing loans from large real estate companies facing risk and operating difficulties.