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UPDATE 1-China orders checks on offshore loans to HNA, Fosun, Wanda, others-sources
June 22, 2017 / 12:08 PM / 6 months ago

UPDATE 1-China orders checks on offshore loans to HNA, Fosun, Wanda, others-sources

(Adds details, comments from companies, background)

By Shu Zhang and Matthew Miller

BEIJING, June 22 (Reuters) - 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 on Thursday.

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

Chinese financial journal Caixin reported on the investigation earlier on Thursday.

The China Banking Regulatory Commission (CBRC) made the request as it moves to control potential systemic risk, including problems posed by domestic companies 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 Thursday’s 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 percent in Hong Kong trading on Thursday, while shares of HNA Holding Group Co Ltd fell more than 6 percent.

Liu Zhiqing, deputy director general of the prudential regulation bureau of the CBRC, 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 on Thursday.

Outbound investment by Chinese companies in the first five months of the year dropped 53 percent from a year earlier, according to China’s commerce ministry. Overseas deals by Chinese companies hit a record $170.1 billion in 2016.

Spokesmen for Anbang and HNA declined comment.

A Fosun spokeswoman said: “Everything is going well and normal with Fosun. Thank you for your concern.”

Earlier on Thursday, Dalian Wanda Group denied as “malicious speculation” that some Chinese banks had ordered the sale of its bonds. Shares in Wanda Film Holding Co fell 10 percent, before they were suspended from trading in Shenzhen. The shares will resume trading on Friday, the company said.

HNA Group, the sprawling aviation-to-financial services conglomerate, has announced more than $50 billion in deals since 2015, including stakes in Deutsche Bank and Hilton Worldwide Hotels Inc..

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

Earlier this month, the chairman of Anbang Insurance Group, which made headlines with a $30 billion spate of deals including the 2015 purchase of New York’s Waldorf Astoria hotel, was detained by authorities, according to sources. The company said that its chairman, Wu Xiaohui, was temporarily unable to fulfill his duties. (Reporting By Shu Zhang, Matthew Miller and Kevin Yao in Beijing and Yan Jiang and Julie Zhu in Hong Kong; Editing by Robert Birsel and Tony Munroe)

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