Bank of China Ltd. proposed to set up an asset management unit to conduct debt-to-equity swap business.

Bank of China Asset Management Co. Ltd. will be established with a total registered capital of 10 billion yuan. The proposal is subject to regulatory approval. The unit will operate as a tier-1 subsidiary of the bank.

The unit will mainly conduct debt-to-equity swap businesses such as acquisition of debt assets, conversion of debt into equity and holding, managing and disposing equity in debt-to-equity swap enterprises, among others.

The announcement came a day after another major Chinese bank, China Construction Bank Corp., announced plans to establish its own asset management unit for debt-to-equity swap business. Previously in November, Caixin had reported that the five biggest state-owned banks in China are considering setting up their own asset management firms to swap problem loans for equity stakes in corporate borrowers.

As of Dec. 20, US$1 was equivalent to 6.95 Chinese yuan.