First of all, the regulatory bottom line of bank capital adequacy ratio may be broken down. According to the Capital Management Measures of Commercial Banks, the risk weight of equity investment in industrial and commercial enterprises passively held by commercial banks is 400% during the legal penalty period, and it rises to 1.250% two years later, while the risk weight of normal loans is only 1.000%. This will greatly increase the capital requirements for banks, requiring a large amount of supplementary capital or reducing dividends. If the regulatory authorities open a "skylight" for the capital occupation of debt-to-equity swaps, it will violate Basel III and disrupt the international financial order.

Secondly, the risk of mixed operation. Although debt-to-equity swap may make financial institutions become important shareholders of problem enterprises, financial institutions themselves are not "experts in industrial operation", and the effect of their active efforts as shareholders may not be significant. The following questions are difficult to answer: how to merge the statements of banks and enterprises, whether banks have sufficient management ability, and how to set up risk isolation mechanism between banks and enterprises.

Therefore, it seems that debt-to-equity swap should not be a prelude to reconstructing the compulsory adjudication mechanism. In addition, after the bank holds the controlling stake in the enterprise, whether the bank's assessment indicators will follow the previous capital adequacy ratio, provision coverage ratio and other indicators, or whether it will assess the operation, development and employment of enterprises such as steel and coal, may be a problem that affects the whole body.

Thirdly, banks hold equity and creditor's rights at the same time, which is easy to bring serious related party transactions. After the enterprise's creditor's rights are converted into equity, the creditor's rights income and equity gains and losses will have a seesaw effect, and the problem of non-performing loans of banks will be covered up. Especially after the changes in the board of directors and management team of banks and enterprises, it is more difficult to sort out the interest disputes between internal operating responsibilities and external equity management of banks and enterprises.

Finally, when the bank holds the creditor's rights, the interest income is certain, but after it is converted into equity, when the equity exits, the bank's income becomes dividend or investment income. However, if the enterprise has no profit, there will be no dividend. In the current economic situation, many enterprises can't maintain normal operation, and there is almost no dividend distribution, not to mention the small increase in equity value.

Moreover, the creditor's rights can also be mortgaged by real estate and land, or guaranteed by a third party. However, after the conversion to equity, these safeguards no longer exist, and the repayment order of creditor's rights precedes equity, so the recovery uncertainty after the bank's debt-to-equity swap is even greater. Moreover, it is more difficult for unlisted shares to withdraw, the liquidity is worse, and the pressure on banks will increase. Therefore, unless there are preferential policies or mandatory instructions, it is difficult for banks to have reasonable commercial motives to do debt-to-equity swaps.