Industrial and Commercial Bank of China (ICBC), the country's biggest lender, said on Monday it has agreed to conduct a 5 billion yuan ($720 million) debt-for-equity swap with cement producer Jindong Development Group.

The bank will use a limited partnership fund to make a 2.5 billion yuan investment in Jindong in the first phase of the swap, ICBC said in a statement.

Jindong, headquartered in Hebei province, is one of China's biggest construction materials companies. Its controlling shareholder is State-owned BBMG Corp.

The deal marks the second debt-for-equity swap announced by ICBC since Beijing launched the scheme in October in a bid to reduce its $18 trillion in corporate debt, equivalent to 169 percent of domestic output.

Earlier this month, the bank said it had signed a 10 billion yuan debt-for-equity swap with Shandong Gold Group to reduce the company's debt burden.

After the proposed $720 million debt swap, Jindong's leverage ratio will come down by 8 percent, ICBC said in the statement.

"Through financial support, ICBC will help Jindong upgrade its industrial structure and push the company to invest more in research to develop in a resource-conserving, environmentally friendly way and aid Beijing in the fight against smog," the statement said.

Hebei, an industrial region bordering the capital, is one of China's most polluted provinces.

Bloomberg