The FTC, at its 385th Commissioners Meeting on March 24, 1999, made a review on the request presented by the Shanghai Commercial and Saving Bank whether the bank can have vis-a-vis negotiation with borrower regarding the swap of collateral in related to the lending agreement with the bank.

In filing the request for interpretation, Shanghai Bank said that a borrower, when asking to swap his/her collateral with new collateral in equal value, usually asks the bank to write off its real right on the old collateral. According to the Civil Code Article 751, "if the creditor waives a real right on which his claim is secured, the surety is released from his obligation to the extend of the rights which have been waived." In banking practices, to accept the borrower's swap of collateral, it will be a form of waiving the real right on the old collateral. But, if the bank cannot have the surety to agree on the swap in order to write off the real rights, the bank would usually refuse the request from the borrower to swap the collateral, which could affect the interests of the borrower.

In "Explanations on Recommendations to Revisions in Seven Articles of Bank's Lending Contracts," FTC suggested several corrections on the contract signed between banking industries and enterprises. The correction period expired on June 30, 1995. The recommendations do not have to be fully incorporated into the contracts between banks and clients, but should serve as the minimum standards for banking contracts. Therefore, each bank can study the most appropriate conditions and terms on contract with their trading counterparts. Banks can negotiate with individual surety under the condition not to impair the original interests of surety regarding the swap of collateral. Such contract shall not contain restrictions that Civil Code Article 751 excluded, though the condition is made to protect the interests of surety but not in the interests of the borrowers. In conclusion, whether the condition on collateral in lending contract in related to Civil Code Article 751 can be handled pursuant to Civil Code Article 755 shall be negotiated between the bank and the individual client.