China Construction Bank Corp. (939) and Bank of Communications Ltd. agreed to lend a combined 1.55 billion yuan ($226 million) to Baosteel Group Corp. to fund the steelmaker’s acquisition of Ningbo Iron & Steel Group.
The Shanghai branch of China Construction Bank offered 800 million yuan in loans with the Bank of Communications providing the remainder, the China Banking Regulatory Commission’s Shanghai bureau said in an e-mailed statement. The money will help Baosteel acquire 56.15 percent of Ningbo Steel, it said.
Local banks in Shanghai have offered more than 2 billion yuan in loans to finance mergers and acquisitions since February, the statement said. The government has been encouraging larger steel mills to take over smaller ones to boost competitiveness and raw material purchasing power.
China’s State Council, or cabinet, on Jan. 14 approved a steel industry stimulus plan, which encouraged Baosteel to take over Ningbo Steel and Baotou Iron & Steel Group. Baosteel would own a stake in Nanjing Iron & Steel Co. (600282) through purchasing Ningbo Steel.
To contact the reporter on this story: Yu Xiao in Beijing at email@example.com
To contact the editor responsible for this story: Teo Chian Wei at firstname.lastname@example.org