China Development Bank has called off HK$44 billion worth of loans to Thailand's Charoen Pokphand Group for its purchase of a Ping An Insurance (2318) stake from HSBC Holdings (0005), Xinhua News Agency said yesterday, casting a cloud over the HK$73 billion deal.
The bank halted the loan as early as mid- December after finding funds for the deal were coming from businessman Xiao Jianhua, Xinhua said, amid questions about the source of his financing.
The mainland bank, which has since issued a risk warning about the deal, also lodged a report with the China Insurance Regulatory Commission.
Reports said one third of the HK$15.2 billion first payment tranche of the purchase - which has been settled - came from former Thai prime minister Thaksin Shinawatra's family. The rest came from Xiao, the founder of several financial and securities firms who is reportedly close to former top government leaders.
The deadline for paying the second bigger tranche, which needs regulatory approval, is February 1.
The collapse of the entire US$9.4 billion (HK$73.32 billion) deal would be a huge blow for HSBC, which is tipped to reap a post- tax gain of US$2.6 billion after disposing of its 15.57 percent stake in China's second-largest life insurer.
Charoen Pokphand Group declined to comment, while Ping An spokeswoman Zhang Zijuan said the deal is proceeding normally and no additional announcement is forthcoming.
Should the acquisition proceed, Charoen Pokphand - known in China as the Chia Tai Group - would become Ping An's largest single shareholder, with a 17.33 percent stake.