Chinese authorities have told banks to stop various business dealings with Anbang Insurance Group [TRDataCustom] amid reports its chairman Wu Xiaohui is being investigated for economic crimes.
A source told Bloomberg that some lenders are already distancing themselves from the company without notice from government. At least six major banks have stopped selling Anbang policies at their branch networks, the publication reported.
According to Bloomberg, Anbang’s life insurance unit distributes nearly 90 percent of its products through banks, so the move could be very damaging to the company’s bottom line. “It’s like having your legs broken,” Grace Zhou, a Hong Kong-based analyst at ICBC International, told Bloomberg. “It’s their main source of revenue.”
A representative for the company, however, said the company’s cooperation with banks remains normal.
This week, Wu stepped down from his position as chairman at the company. Anbang said Wu stepped down for “personal reasons” and was “no longer able to perform his duties.” Wu had previously been detained by Chinese authorities, and the Wall Street Journal later reported that a special investigative team that looks into economic crimes was responsible for the detainment.
Last month, Anbang was banned from selling two investment products by Chinese regulators.
Anbang, which claims to have about $300 billion in assets, paid almost $2 billion in 2014 for the Waldorf-Astoria Hotel. Earlier this year, it backed out of negotiations to redevelop Kushner Companies’ 666 Fifth Avenue after questions about potential conflicts of interest were raised. It also dropped a $13 billion-plus bid last year to acquire Starwood Hotels and Resorts following scrutiny from regulators over its operating and ownership structure. [Bloomberg] — Miriam Hall