The Shanghai United Assets and Equity Exchange agreed Thursday with two banks in Shanghai to offer credit of 10 billion yuan (US$1.46 billion) for mergers and acquisitions.

The Shanghai branch of the Industrial and Commercial Bank of China and the Bank of Shanghai will offer the credit for merger and acquisition transactions, said the exchange.

Each bank will offer a credit quota of 5 billion yuan.

The credit will be used to finance mergers and acquisitions through a platform of the exchange.

The banks can use the exchange as a platform to target clients or follow recommendations on possible clients from the exchange.

The Shanghai-based exchange offers equity and assets transactions throughout the country.

Merger and acquisition activities in China are expected to pick up in the second half of 2009 when the market recovers, industry watchers said.

M&A activities in China slumped by almost half in the second half of this year due to the impact from the beginning of the year's austerity policy and the spill from the global financial crisis, said PricewaterhouseCoopers.

In early December, China allowed qualified banks to offer merger and acquisition credit.

The rule is expected to activate more mergers and acquisitions as it offers leverage for buyers, said Xie Tao, a PwC partner.

(Shanghai Daily December 26, 2008)