HSBC tells dealmakers to shun HNA
HONG KONG: HSBC Holdings Plc, Europe’s biggest bank by assets, has told its dealmakers to avoid pursuing business for now with embattled Chinese conglomerate HNA Group Co, said people with knowledge of the matter.
Senior HSBC officials told bankers in recent months not to pitch HNA for new merger advisory work or lend additional money to the conglomerate, according to the people.
The bank stepped up its scrutiny of HNA this autumn, said one of the people.
The lender’s concerns centre on HNA’s heavy debt load and the potential reputational risk from working with them, according to the person.
While HSBC had largely steered clear of advising HNA in the past, particularly at the group level, its bankers were still able to pitch deals to the Chinese conglomerate earlier this year, said another person.
The move comes after Chinese regulators asked some local banks in June to report overseas loan exposure to acquisitive companies, including HNA.
HSBC joined other firms like Bank of America Corp, Citigroup Inc and Morgan Stanley, which were avoiding advisory and financing work for HNA because they were unable to get internal approvals, said sources in July.
The Chinese conglomerate is facing increasing difficulties raising funds as scrutiny mounts over the acquisitive conglomerate’s surging borrowing costs.
Chief executive officer Adam Tan said last month HNA was considering selling assets, suggesting the company was reversing a shopping spree that’s strained its finances.
The group has announced more than US$40 billion (RM163.58 billion) of asset purchases since the beginning of last year, including stakes in hotel operator Hilton Worldwide Holdings Inc and Deutsche Bank AG, according to data compiled by Bloomberg. Bloomberg