Sun, Jun 25, 2017 page16

• China regulator inspects loans to major firms with overseas investments: Wanda

  • AFP, BEIJING
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  China’s banking regulator has ordered an inspection of potentially risky loans to major Chinese companies that have invested heavily overseas, one of the firms under scrutiny said on Friday.

  Dalian Wanda Group Co (萬達集團) said other domestic companies caught up in the review include AC Milan owner Rossoneri Sport Investment Lux, Club Med’s Fosun Group (復星集團) and HNA Group Co (海航集團).

  The China Banking Regulatory Commission (CBRC) this month ordered banks to carry out credit and risk analysis at the firms “that engaged in ferocious overseas investment and had relatively large bank exposure,” Wanda said, confirming an earlier report in Chinese business magazine Caixin.

  “Regulatory departments will arrange on-site inspections of relevant enterprises,” Wanda said on Weibo.

  The Chinese conglomerate said investigators are to “check for possible risks,” but added that authorities have not yet made any “risk judgements.”

  Wanda’s statement came a day after shares in its film unit were suspended from trading in Shenzhen following a heavy fall sparked by rumors that banks would dump the company’s bonds, which it denounced as vicious Internet speculation. Its shares resumed trading on Friday.

  When asked about the probe, HNA Group said it was in “a sound financial and operational situation,” while Fosun did not immediately respond to a request for comment.

  Rossoneri could not be reached, while a CBRC spokesperson would not confirm the inspection, but said it would release a statement.

  In response to the reports, the Industrial and Commercial Bank of China Ltd (ICBC, 中國工商銀行) said it was conducting “routine” loan checks that did not mean it would reduce credit to those firms, state broadcaster CCTV quoted the bank as saying.

  ICBC also said it had not sold their bonds.

  Beijing has encouraged Chinese companies to invest overseas to open up new markets.

  Many firms obliged, pouring billions of US dollars into overseas purchases to such an extent that Chinese authorities became worried about capital flight and bad loans.

  The government has since reversed course, denouncing “irrational” investment abroad and putting restrictions on fund outflows, as well as curbing lending practices as policymakers fret about the nation’s soaring debt.

  Wanda bought AMC Entertainment Holdings Inc — owner of US-based cinema chain AMC Theatres — for US$2.6 billion in 2012 and last year acquired Legendary Entertainment LLC for US$3.5 billion.

  However, it had to abort a deal to buy the operator of the Golden Globe awards in a US$1 billion deal following reports that it was sunk by a Chinese clampdown on overseas investments.

  The crackdown did not prevent AC Milan being sold to Rossoneri Sport Investment Lux — a company linked to Chinese businessman Li Yonghong (李勇鴻) — in April in a 740 million euro (US$828 million) deal which saw the Chinese-led consortium take a 99.9 percent stake in the Italian club.

  Fosun, which has interests in property, finance, pharmaceuticals, steel and entertainment, has been aggressively buying assets in Europe and North America. In 2015, it took over the French holiday resorts group Club Med.

  HNA has also been on a spending spree, including increasing its stake in German lender Deutsche Bank and buying an US$8 billion holding in Rio de Janeiro’s Galeao International Airport.
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