China regulator orders checks on offshore loans

BEIJING • China's banking regulator has ordered a group of lenders to assess their exposure to offshore acquisitions by a handful of companies that have been on an overseas buying spree, two people familiar with the matter said.

The firms include HNA Group, Dalian Wanda Group, Anbang Insurance Group, Fosun International and Zhejiang Luosen, which was behind the purchase of AC Milan football club earlier this year, one of the sources said.

The China Banking Regulatory Commission (CBRC) made the request as it moves to control potential systemic risk, including problems posed by domestic firms acquiring more global assets. China launched a clampdown on overseas direct investment last year.

The sources said the CBRC's communication to the banks was made earlier this month, but the latest news of the requests appeared to have battered shares in a handful of listed firms. Shares in Fosun International fell as much as 9.6 per cent in Hong Kong trading yesterday, while shares of HNA fell more than 6 per cent.

Mr Liu Zhiqing, deputy director- general of CBRC's prudential regulation bureau, declined to comment on the reported communication to banks, but said the regulator does keep an eye on large corporate groups that could pose systemic risks. "Some big companies are indeed the focus of our attention on systemic risks, because a big company has big risk exposure for banks and they could transmit to other companies," he told journalists.

Outbound investment by Chinese companies in the first five months of the year dropped 53 per cent from a year earlier, according to China's Commerce Ministry.

The China Banking Regulatory Commission made the request as it moves to control potential systemic risk, including problems posed by domestic firms acquiring more global assets.

Spokesmen for Anbang and HNA declined comment. A Fosun spokesman said: "Everything is going well and normal with Fosun. Thank you for your concern."

Dalian Wanda Group also earlier denied "malicious speculation" that some Chinese banks had ordered the sale of its bonds.

Shares in Wanda Film Holding fell 10 per cent before they were suspended from trading in Shenzhen. The shares will resume trading tomorrow, the company said.

Dalian Wanda has purchased a slew of movie theatre companies, led by AMC Entertainment Holdings, along with buying a controlling stake in US film studio Legendary Entertainment.

Earlier this month, the chairman of Anbang Insurance Group, which made headlines with a US$30 billion (S$42 billion) spate of deals, including the 2015 purchase of New York's Waldorf Astoria hotel, was detained by the authorities, according to sources. The firm said its chairman Wu Xiaohui was temporarily unable to fulfil his duties.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 23, 2017, with the headline 'China regulator orders checks on offshore loans'. Print Edition | Subscribe