Hong Kong Checking Banks' Loans to China's HNA and Wanda, Sources Say

  • Lenders required to submit survey to HKMA, people say
  • Checks on loans to conglomerates stepped up in recent weeks

A pedestrian walks past the HNA Group building in Beijing, China.

Photographer: Qilai Shen/Bloomberg

The Hong Kong Monetary Authority has asked banks in the city for details of their loans to HNA Group Co. and Dalian Wanda Group Co., according to people familiar with the matter.

Lenders were required to submit a survey to the city’s de facto central bank providing information such as total credit extended and outstanding loans to the two companies, said the people, who asked not to be identified as the information isn’t public. Checks on lending to Chinese conglomerates were stepped up in recent weeks, one of the people said.

In a statement to Bloomberg, the HKMA said it engages in discussions with banks on different issues, without commenting further. It’s common practice for the authority to query banks over their exposures to certain sectors, as it has done with property loans in recent months.

While the checks aren’t a guarantee of any regulatory action, the spotlight on real estate did lead to lending curbs in a bid to rein in Hong Kong’s rampant housing market. HNA has been expanding its presence in the territory, spending about HK$27 billion ($3.5 billion) earlier this year on four government land sites in the former Kai Tak airport area.

Wanda declined to comment. Responding to a Bloomberg request for comment, HNA said in a statement that its Hong Kong businesses were in strict compliance with local regulations and the group’s current operating situation was in “good shape.”

The HKMA’s scrutiny on loans to the two was reported by the Apple Daily earlier.

The move comes at a time when mainland Chinese regulators have also stepped up scrutiny of the companies behind last year’s unprecedented spree of takeovers outside the country. China has embarked on a drive to reduce leverage in financial markets and snuff out systemic risks ahead of a Communist Party leadership transition later this year, while remaining vigilant for accelerated capital outflows that threaten to weaken the nation’s currency.

The country’s banking regulator has asked domestic lenders to provide information on overseas loans made to firms including Wanda, HNA and Anbang Insurance Group Co., people familiar with the matter said in June. Authorities followed that with a directive restricting companies from making “irrational” overseas investments in industries such as real estate, hotels, entertainment and sports clubs.

— With assistance by Jing Yang De Morel, and Prudence Ho

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