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 today. Dalian Wanda Group said other domestic companies caught up in the review include AC Milan owner Rossoneri Sport Investment Lux, Club Med’s Fosun Group and HNA Group. The China Banking Regulatory Commission (CBRC) ordered banks this month 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 its official Weibo account. The Chinese conglomerate anticipates investigators will “check for possible risks” but added that authorities have not made any “risk judgements” yet.
Wanda’s statement came a day after shares in its film unit were suspended from trading in Shenzhen following a heavy fall sparked by rumours that banks would dump the company’s bonds, which it denounced as vicious speculation on the internet. Its shares resumed trading Friday. When asked about the probe, HNA Group told AFP 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. Beijing has encouraged Chinese companies to invest overseas to open up new markets. Many firms obliged, pouring billions into overseas purchases to such an extent that Chinese authorities became worried over 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 country’s soaring debt.
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Wanda bought AMC Entertainment Holdings — owner of US- based cinema chain AMC Theatres — for $2.6 billion in 2012 and last year acquired Legendary Entertainment for $3.5 billion. But it had to abort a deal to buy the operator of the Golden Globe awards in a $1 billion deal following reports that it was sunk by a Chinese clampdown on overseas investments. However, the crackdown did not prevent AC Milan being sold to Rossoneri Sport Investment Lux in April in a 740 million-euro ($830 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 in recent months, including increasing its stake in German lender Deutsche Bank and buying an $8-billion holding in Rio de Janeiro’s airport. A spokesperson for the CBRC would not confirm the inspection but said the regulator would release a statement.