China’s commercial banks will be able to lend money for domestic mergers and acquisitions according to new rules issued by the banking regulator, the Wall Street Journal reported. Although lawyers cautioned that the relaxation on lending does not open the door to leveraged buyouts, it does open a new funding channel for companies that are keen to expand but are unable to raise money through capital markets. The China Banking Regulatory Commission has also imposed strict limits on banks’ exposure to deals. Under the new rules, banks may support domestic companies in M&A activity that involves share transfers, the purchase of new shares, and acquisitions of assets and debt. During its life a loan cannot exceed half of a bank’s core net capital, and advances to any single borrower cannot exceed 5% of core net capital. Loans are not permitted to run for longer than five years, and must not account for more than half of the funding of an individual M&A transaction.