The Hong Kong Monetary Authority is reportedly investigating China Citic Bank International for its offshore financing activities, an ongoing headwind for Beijing authorities due to their desire to maintain capital controls.
A team from HKMA has been sent to China Citic to probe overseas borrowing activities from companies such as airline and finance provider HNA and real estate developer and former part SeaWorld owner Zhonghong Zhuoye, according to an «FT» report, itself citing anonymous sources. The team is accompanied by auditors from a Big Four accounting firm.
In an inquiry, Citic Bank International said there were no investigations into its offshore financing activities, adding that it always operates in compliance with relevant laws and regulations.
The fates of such companies have followed similar trajectories.
Since late 2016, Chinese authorities have further tightened capital controls to prevent companies from moving cash offshore following a 2015 spending and borrowing boom and this led many to seek offshore funding, especially through Hong Kong’s financial system.
In 2017, HNA was forced to sell more than $20 billion in global assets and Zhonghong was delisted from the Shenzhen Stock Exchange for poor performance.
According to the report, anonymous sources claimed that Citic Bank International has since moderated its desire to grow its investment banking arm.
