Huarong freezes new loans to developer Sunac
One of the nation’s most acquisitive developers now under the spotlight, as debt and leverage in the financial system comes under mounting regulatory scrutiny
China Huarong Asset Management, one of the country’s big four state-owned bad loan banks, has ordered a suspension of new lending to property giant Sunac China Holdings, as worries remain over high debt levels and the regulator’s intolerance to high corporate leverage.
Huarong’s risk department ordered a suspension of any new loans to Hong Kong listed property firm Sunac that haven’t already been signed, Bloomberg reported on Tuesday night citing an internal email.
Executives from Huarong confirmed the email and internal order with the South China Morning Post. Huarong also called for heightened risk monitoring and attention to existing loans and said any projects deemed necessary, with controllable risk, will need approval from Huarong’s headquarters.
The email cited the developer’s high leverage and debt as well as the regulator’s increased focus on “aggressive expansion” by Sunac, which is chaired by property magnate Sun Hongbin.
Beijing has stepped up its crackdown on money laundering and initiated a series of measures to keep a check on financial risks ahead of the 19th party congress, taking place in the capital from October 18.