Bank of Communications (BoCom) said it will provide a 750 million yuan ($109.65 million) merger and acquisition (M&A) loan to Baosteel to help China's largest steelmaker buy into Ningbo Iron & Steel Co.
In a statement, BoCom said its Shanghai branch has issued the loan, the bank's first for M&A activities.
Baosteel has agreed to buy a combined 56.15 percent stake of Ningbo for about 2 billion yuan, which analysts said is a prelude to an industry consolidation.
The China Banking Regulatory Commission last December released guidelines on the supervisions of M&A loans, which has opened the floodgates for issuance of such loans.
Last month, Industrial and Commercial Bank of China (ICBC) issued a loan of 400 million yuan to finance Shanghai Bailian Group's acquisition of Lianhua Supermarket chain.
On Tuesday, ICBC signed an agreement with Tianjin Property Rights Exchange under which the bank will provide M&A loans to local firms.