The China Banking Regulatory Commission has issued a guideline for commercial banks, allowing them to loan enterprises for their merger and acquisition deals and regulate the banking institution operations.

Cai E'sheng, vice chairman of the commission, said the guideline has come out at a critical time.

"The global financial crisis, which was triggered by the sub-prime crisis in the United States, has to some extent affected the Chinese economy. Some small-and-medium-sized enterprises, including some key enterprises should be integrated, especially for those with excessive production capacity. So merger and acquisition may take place. The guideline was initiated to meet the demands of society."

According to the guideline, for the merger and acquisition deals which are loaned by banks, the purchaser and the acquired enterprise must belong to related industry, or have strategic relativity. And the merger and acquisition can help the purchaser get strategic resources such as the capacity of research and development, trademarks and franchise.

Currently commercial banks can only loan a maximum of 50% for the funds of the merger and acquisition deal.