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Report: Chinese banks expand offshore loan recovery teams as bad debts rise

Some Chinese banks are expanding their offshore loan recovery teams in Hong Kong amid increasing bad debts linked to struggling overseas businesses and acquisitions, the Financial Times reported Oct. 17, citing three people familiar with the matter.

Industrial & Commercial Bank of China Ltd., Bank of China and China Construction Bank as well as some other large Chinese financial institutions have expanded recovery and restructuring operations at their offshore units in Hong Kong over the last three years, sources said.

Chinese lenders had deemed such offshore operations unnecessary until recent years. Banks are now rapidly expanding such teams in Hong Kong and poaching restructuring specialists from other global banks, one of the sources said.

Chinese companies became net sellers of global assets in September, offloading about US$40 billion of overseas assets while acquiring just US$35 billion of assets outside mainland China, the publication cited data from Dealogic as saying.