| China is experiencing the transition from the stage of rapid speed of industrialization to the lower speed of industrial growth. With the end of the era of extensive economic growth, environmental constraints are increasingly enhanced. Resources(mineral, labor, capital) tensions began to highlight. China has been unable to rely on a large number of inputs to promote economic growth anymore. Therefore, the allocation of resources has gradually become the focus of current economy. China has always attached importance to the industrial structure in the strategic level and promoted the optimization of resources allocation vigorously as one of the ways to achieve the optimal allocation of resources among enterprises. In this scenario, M & A business has become more and more important.From the micro perspective, in 2015 and beyond, the mixed reform of state-owned enterprises, the capital diversion by the new over-the-counter market, and stock registration system is getting closer, more listed companies take the road of market value management. In one way, M & A provide the listed companies with the expansion support and the trans-boundary transition probability. On the other way, M & A promote the enterprise system innovation and guide the resource allocation. In summary, M & A is not only an important way to adjust the structure and promote transformation, but also an important way for Chinese enterprises to develop and realize the great-leap-forward development. These macro and micro demands are favorable conditions for the prosperity of M & A market.The rapid development of M & A relies on the effective support of the funds. In recent years, the country encourages commercial banks to support M & A behavior. “The Risk Control Guidance for Commercial Banks’ Participation in Mergers and Acquisitions” promulgated by China Banking Regulatory Commission shows the policy support to enable the commercial banks to get through from the capital market to the equity market. Commercial banks’ participation in the M & A can improve the efficiency in the usage of bank funds effectively. At the same time, the relationship between enterprises and banks are getting closer so that banks can get more information of the enterprises’ business activities for further cooperation.As the policy barriers gradually reduced, the development of commercial banks in the M & A market is not a boundless plain. The main difficulties are from two perspectives. First, M & A require a large amount of money which weakens the motivation of banks. Because according to the Basel agreement, the capital adequacy ratio of commercial banks is under rigid limit so that banks’ credit scale has to match the capital adequacy ratio. Second, M & A are a complex business. It happens often that the actual operation of the M & A failed to achieve the goal and even directly burdened the parent company’s operation and profitability. So the risk of M & A is higher than the traditional business which demands for higher risk control ability of the banks. Based on the above two difficulties, this paper aims to discuss how commercial banks can avoid the limitation of capital adequacy ratio by the appropriate design of M & A plan in order to improve the income of banks. On the other hand, this paper systematically analyzes the internal and external risks faced by commercial banks in M & A and puts forward the strategies and means of controlling risks. In the end, this paper applies the theory to the practice of commercial banks and describes the specific implementation method of product design and risk control. |
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