Debt-to-equity plan welcomed by experts

Experts have applauded a pilot debt-to-equity swap plan that would allow banks to convert bad loans into equities in the borrowing enterprise, while they said banks need to be more prudent when managing risks.

The plan, which may be approved by the end of this month, may allow the conversion of 1 trillion yuan ($154.6 billion) in bad loans, reported Bloomberg on Tuesday.

A research note from Xiangcai Securities Co said the swap plan would bring about a win-win situation in which borrowing enterprises are lifted from financial difficulties and recover, helping lenders to reduce bad loan ratio.