China Already Reduced Risk Weighting Requirements For Debt-For-Equity Swaps?
According to some officials, China’s financial sector regulator has reduced risk weighting requirements for debt-for-equity swaps so that commercial banks would deal with growing corporate debts faster.
The internal notice of the China Banking and Insurance Regulatory Commission concluded that stakes in listed businesses will carry a weighting of 250% when banks calculate risk-weighted assets. Stakes in unlisted businesses will get a weighting of 400%. The new regulations lower capital required for lenders to conduct debt-for-equity swaps.