HNA Group, the Chinese conglomerate that is also the largest shareholder of Deutsche Bank, is using all its imagination to service the ballooning mountain of debt.
HNA’s latest creative idea is to tap into the pockets of its own employees, who number just over 400,000, offering them an above average return for their unequivocal financial support by way of an opaque in-house investment product.
HNA Group, which has about $100 billion in debt, has been scrambling for months to raise cash to service the burden.
Darling No More
The conglomerate's more than $40 billion global feeding frenzy was previously a boon for global investment banks, some of which however are now shying away from doing business with the Chinese company.
HNA maintained its ties to UBS, which put up 2.6 billion euros for the Chinese bank's purchase of the Deutsche Bank stake, even as Citigroup, Bank of America, Morgan Stanley and Goldman Sachs either cut business relations or told their bankers not to write new business with the Chinese firm.
Government Concern
Not only banks but whole countries are getting reluctant in dealing with the firm. The government of New Zealand recently stepped in to block HNA’s bid to buy UDC, ANZ Bank’s New Zealand loans unit. The government cited the extreme indebtedness and concern about transparency of HNA’s ownership details as reasons for its decision.
Normally supportive domestic Chinese banks have also grown cautious as the central government continues to put the squeeze on capital outflows.
Deutsche Bank CEO John Cryan is said to have been reluctant to meet with representatives of the Chinese conglomerate but eventually granted them an audience in Frankfurt late last year.
