Chinese authorities launch probe into financial system fearing “Lehman moment”
By
Nick Beams
24 June 2017
China’s bank regulator has ordered a probe into some of the country’s largest overseas investors, citing the possibility of “systemic risk” to the entire financial network because of the practices investors have employed in acquiring assets.
The probe to be conducted by the China Banking Regulatory Commission (CBRC) is described as a “fact finding” mission. It will target the connections of Chinese banks to four companies: the property-entertainment giant Dalian Wanda, the consumer group Fosun International, the conglomerate HNA, all of which are listed firms, and the unlisted insurer Anbang.
According to one estimate, the four companies have been responsible for $56 billion in overseas deals during the past five years.
Their acquisitions include the purchase of New York’s Waldorf Astoria Hotel, the US cinema firm AMC Entertainment, the theatre production group Cirque du Soleil and a 10 percent share in Deutsche Bank.
The listed companies experienced a sell-off of their stocks and bonds on Friday, even as they sought to counter the effects of the investigation by issuing assurances that it was business as usual. Large state banks also declared they had no intention of cutting off funds to the companies involved.
A report in the Financial Times cited “people briefed on the investigation” who said the CBRC would examine “how and whether these companies used high-interest financial products and overseas loans for their buying spree, which took place largely outside the purview of Chinese regulators.”
The CBRC move comes after the detention earlier this month of Wu Xiaohui, the head of Anbang, over concerns about his purchases of overseas assets as…