A subsidiary of the Industrial and Commercial Bank of China (ICBC) has signed deals with seven debtor-companies to convert nearly 60 billion yuan ($8.6 billion) worth of unpaid loans into equity shares. China’s largest bank announced the deals to underscore its ongoing contribution to a debt-to-equity swap initiative launched by the central government last year. According to Caixin, the government is encouraging banks and other lenders to help defuse mounting corporate debt risks by converting loans into company stakes. Policymakers hope the swaps will give indebted companies enough breathing room to improve their finances while also helping banks limit potential losses. The government’s strategy calls for banks and other creditors to buy these new shares through subsidiaries, as banks are not legally allowed to directly hold equity in non-financial institutions.