SHANGHAI The world's largest lender, Industrial and Commercial Bank of China (601398.SS)(1398.HK), has signed a 26 billion yuan ($3.79 billion) debt-for-equity swap framework agreement with Shandong Iron & Steel Group, the official Xinhua news agency reported on Thursday.
China's lenders are signing deals with struggling, debt-laden state firms to lower their leverage and cut financing costs following instructions from Beijing.
The deal will help state-owned Shandong Iron improve its capital strength and promote diversification in its corporate ownership structure, the agency reported.
This is the fifth such swap signed in the northern province of Shandong, the agency added.
In December, ICBC signed three debt-for-equity swaps with Shanxi province's highly indebted state-owned coal and steel firms.
Heavy industries such as coal and steel have suffered from overcapacity as China relies increasingly on consumption for economic growth.
The deputy general manager of Shandong Iron was investigated by the ruling Communist Party, according to the party's anti-graft watchdog.
(Reporting by Beijing monitoring desk and Engen Tham in Shanghai; Editing by Nick Macfie)