Bank of America halts HNA transactions amid debt concerns, people say

Bank of America Corp. has told investment bankers to stop working on transactions with HNA Group Co. for now amid growing concerns about the acquisitive Chinese conglomerate’s debt levels and ownership structure, according to people familiar with the matter.

The U.S. investment bank joins other Wall Street firms, including Citigroup Inc. and Morgan Stanley, that are largely steering clear of advising and financing the group on deals because they are unable to get internal approvals from “know your customer” committees, the people said, asking not to be identified because the information is private.

Senior officials at Bank of America’s Merrill Lynch unit communicated internally last month that bankers shouldn’t currently pitch for new acquisitions and fund raisings, the people said. Scrutiny of Chinese companies came into focus this week after people familiar with the matter said that China plans to cut off some funding for billionaire Wang Jianlin’s Dalian Wanda Group Co., concluding the conglomerate breached restrictions for overseas investments.

An internal memo at Bank of America on holding off on deals with HNA for now went to fewer than five bankers who would be in a position to solicit business from the Chinese company, another person familiar with the matter said. The New York Times reported earlier that Bank of America had said in an internal email that it had decided to remove itself from transactions with HNA.

Bank of America had advised HNA on several attempted overseas acquisitions in the past few years, people said. The decision has affected deals the firm was working on for HNA, including the planned Singapore IPO of HNA Commercial REIT, two of the people said. Banks regularly reassess their comfort with potential clients, and their stance toward HNA could change, they said.