SAR Banks Grilled Over US$200m Loan to Dairy

HONG KONG - The Hong Kong Monetary Authority is questioning lenders over a US$200 million (HK$1.56 billion) loan raised by China Huishan Dairy Holdings (6863), as regulators try to unpick the group's tangled finances.
calendar icon 26 April 2017
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Hong Kong's The Standard reports that the banking watchdog has been raising its scrutiny of Hong Kong bank lending to mainland companies, fretting that SAR lenders are growing increasingly exposed to worsening credit conditions there.

Huishan, one of China's biggest dairy firms, embraced "innovative financing," and investors flocked to a HK$10.14 billion Hong Kong listing. But it has now missed debt payments, breached loan covenants, and all but two directors have quit its board, and a key executive is missing.

Sources told the media the HKMA had asked banks for information on the due diligence and credit-checking processes undertaken when making the loan.

The loan had apparently been taken out with Bank of Shanghai Hong Kong, China CITIC Bank International, China Merchants Bank, Chong Hing Bank, Hang Seng Bank, and HSBC.

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