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Searching for Evergrande links to a regional bank poses a new threat

China’s top banker is set to investigate Evergrande’s relationship with a well-known Chinese bank, which could be dangerous for the world’s largest debtor and billionaire founder Hui Ka Yan.

Chinese media reported in May that China Banking and Insurance Regulatory Commission (CBIRC), the country’s leading banking regulator, was investigating more than Rmb100bn ($ 15.6bn) in connection with a Shenzhen and Shengjing Bank headquarters, a lender in Hong Kong. and others. The investigation is nearing completion, according to two experts.

The supervisor monitored the bank’s appearance on Evergrande’s loans and Hui’s role in corporate relations, people added. Chinese media also reported that the regulator focused on Evergrande and Shengjing events, with the producer playing a major role.

One expert in the study said it appeared that there had been a breach of law with Shengjing and Evergrande over a loan approved by one lender.

Frequent phone calls to Shengjing Bank and emails for comment were not answered.

Evergrande did not respond to a request for comment from the company or Hui.

An investigation by Chinese bank officials into the worst-case scenario in Evergrande, which has been hit hardest. financial problems which has shaken international markets. The struggle for development has also created doubts about the health of a large segment of the economy, namely contributes to China’s economic growth model.

The efforts of managers have been particularly important as Beijing is facing what could be one of them major debt restructuring in Chinese history, with all Evergrande loans totaling more than $ 300bn.

Manufacturer announced a $ 1.5bn sale about 20 per cent in Shengjing Bank at the end of September in a financial group of government officials in Shenyang city northeast. The deal was part of Evergrande’s rush to sell goods a few days later is missing great interest on the maritime bond.

Evergrande said at the time the sale of the property was to release money and address the “disadvantages” of its banking crisis.

But it added in the same document that Shengjing demanded that all the money be used to repay the debt that Evergrande had in the bank, which raised questions as to whether the producer had relied on his business to repay the loan.

China Lianhe Credit Rating, Beijing’s pricing agency, said in a July report that Shengjing Bank had “violated the law and needed to be monitored,” adding that it “posed a serious risk to unidentified customers”.

Among the problems mentioned in the report were the loans made by Shengjing Bank to “party lenders”, which could include shareholders. He did not name the tenants.

Evergrande’s sale of part of Shengjing’s share also attracted the attention of the international community. Counselors for bondholders he told them last month that using the money to repay another lender would be tantamount to “bias” at a time when it is unknown whether they will be reimbursed.

Evergrande the gradual avoidance of infidelity by not transferring money at the end of October before the grace period ends, but today he is facing the last day.

Evergrande bond prices have lost their value since the initial reports of this study. The developer faced several subsequent setbacks, including project delays and bond losses, which have confirmed insecurity of the session.

Some Chinese developers including Sinic, Fantasia and China Modern Land have failed to pay their debts. Commodity company Kaisa, a major lender in foreign markets, asked for “endurance” this week in order to earn money from real estate sales.

Oops, was once the richest man in China, pursued the sale of goods with the aim of making money and avoiding debt repayment. But the Shengjing Bank rebate is the only part of the deal that has been completed in recent months.

The purchase of the price by the state bankers also represented a clear signal of government action at a time when Beijing’s real role in announcing Evergrande’s future was uncertain.

In the past, concerns about communication between individuals, companies and banks have prompted the government to take action. Baoshang Bank was seized by the government in 2019 after it collapsed after lending money to companies run by Tomorrow Group, a financial and financial group led by a billionaire. Xiao Jianhua, who also had a large share in the bank. Xiao disappeared later to seize and Chinese donors from the suite in Hong Kong in 2017.

Shen Meng, director at Chanson & Co, a Beijing real estate bank, warned that some Chinese banks run by private companies appear to be forced to offer large loans to their owners.

For Chinese companies facing a number of financial challenges, especially commercial housing, participating in commercial banking has become an important “transformation” process, he said.

But such an agreement posed a “hidden risk”, Shen added, allowing shareholders to use low-cost loans on a large scale, or, in the case of a business, use a bank to increase debt.

The CBIRC provided new incentives to monitor banks regulating stocks in June.

However, Alicia García Herrero, Asia-Pacific chief financial officer at French bank Natixis, said bank lenders could move swiftly after Baoshang’s collapse to summon small debtors – a threat to the party.

“I did not have a formal education. . . it does not seem to be happening, “he said.

Reports of Sherry Fei Ju in Beijing, Sun Yu in Shanghai, Primrose Riordan and Thomas Hale in Hong Kong and Edward White in Seoul.


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