ICBC Says Loan Checks On Acquisitive Companies Are ‘Normal’

The Industrial and Commercial Bank of China (ICBC) tried to quell recent concerns saying loan checks on companies that made overseas acquisitions were normal and routine, reported Reuters.

According to Reuters, reports surfaced last week that the ICBC had told lenders to examine credit extended to highly acquisitive firms. The ICBC said the assessment did not indicate it will reduce credit lines to the purchasing companies, and it is not “dumping” bonds issued by these companies.

Reuters noted the ICBC seemed to be responding to a recent market rumor. Media outlets had reported China’s banking regulators were ordering a group of lenders to look into their exposure to acquisitions outside of China. The handful of purchasing companies in question appeared to be on an international shopping spree and included Anbang Insurance Group, Dalian Wanda Group Co., Fosun International, HNA Group and Zhejiang Luosen. The latter purchased the A.C. Milan Football Club earlier in 2017.

The China Banking Regulatory Commission (CBRC) — which is moving to control potential systemic risks such as problems posed by local companies purchasing global assets — authorized the examination, according to Reuters. Reuters also reported that China toughened its overseas direct investment protocol last year. The moves come as companies around the world look outside China for supply chain financing, causing setbacks to China’s corporate banking sector.

New research from East and Partners, released this week, discovered that CFOs the world over are changing their supply chain financing practices as they plan to reduce the number of banks from which they access this type of financing. Currently, companies surveyed use an average of 14 supply chain financing banks, researchers said.