Geely taps China banks to back $1.8 bln Volvo deal

By George Chen and Prudence Ho

HONG KONG (Reuters) - Geely, the Chinese carmaker picked as the preferred bidder for Ford Motor's Volvo unit, is seeking at least $1 billion in loans from Chinese banks to finance its $1.8 billion bid, sources said on Tuesday.

Home-grown Geely, which means "lucky" in Chinese, is hungry for modern and innovative technologies from the Swedish brand to upgrade its cars and tap the auto market in China, the biggest in the world.

At least three major Chinese banks including Bank of China, China Construction Bank and Export-Import Bank of China had agreed to extend loans to Zhejiang Geely Holding Group, said the banking sources briefed on the plan.

"Money is not a problem for Geely," said a source. "They definitely have strong support from Chinese banks and there are a number of private equity funds queuing up to invest in Geely."

Export-Import Bank of China is a policy lender wholly owned by the Chinese government and directly led by the cabinet. Bank of China is China's top foreign exchange lender. China Construction Bank is the country's No.1 property lender.

Last month, Volvo's union leaders held their first talks with Geely but were still waiting to see Geely's financing plans for the loss-making Swedish carmaker.

Geely declined to comment. All three Chinese banks involved declined to immediately comment on the matter.