Desperation begins to set in as banks continue dumping loan assets
The mighty continue to fall victim to the ever-worsening fund drought.
Credit Agricole, France's largest retail banking group and the eighth largest in the world, is trying to unload millions of dollars in Asian loans held on its books at deep discounts to remain liquid.
Currently on the block is a slice of a HK$9 billion (US$1.2 billion) loan to Hong Kong blue-chip conglomerate Swire Pacific Offshore Holdings, Ltd., which Credit Agricole is selling at 95 cents on the dollar, a steep discount for a high-quality security to a solid borrower.
Swire Pacific is one of Hong Kong's biggest companies and owner of Cathay Pacific Airways Ltd.
Like many other European lenders, Credit Agricole is under pressure to shrink its balance sheet as funding has dried up. The banks have already scaled back on lending, squeezing some companies in Asia, and are now selling loans to further shrink their assets.
"Normally, banks don't sell newly signed-up loans at a loss unless they are really desperate to offload the assets," a Hong Kong-based banker said.
The five-year loan was made just last June by a group of nine banks, including Credit Agricole, Deutsche Bank AG and HSBC Holdings PLC, with each providing HK$1 billion, a person familiar with the situation said.
Credit Agricole declined to comment.