* HNA says also clears KYC checks with Credit Suisse, Nomura
* Says clearances show tide turning for group
* Trading of shares in 7 HNA units halted pending announcements (Adds sources on HNA considering IPO or sale for Swissport)
By Julie Zhu
HONG KONG, Jan 24 (Reuters) - China’s HNA Group said it has passed compliance checks of several global banks, a rare bit of good news for the cash-strapped conglomerate amid global regulatory scrutiny of its governance and ownership.
HNA said in an email to Reuters on Wednesday it has in the past few months cleared know-your-customer (KYC), or internal due-diligence, checks of JPMorgan Chase & Co, UBS Group AG, Credit Suisse and Nomura, among others.
The aviation-to-financial services conglomerate has been facing additional scrutiny and due-diligence checks from banks and regulators following its July announcement that it changed its shareholding structure, while indicating that two previously named shareholders were in fact proxies for company founders.
Several regulators have subsequently blocked or questioned its overseas deals. HNA has also recently struggled for cash, asking some lenders to extend loans and delaying payments to lessors in several cases.
Separately, people close to the matter told Reuters that HNA was considering an initial public offering or sale of cargo handler Swissport to help boost its finances.
“The news is a positive indication of the tide turning in a period of scrutiny for HNA, which revealed a revised ownership structure in late July of 2017,” HNA said, referring to the passing of the compliance checks.
Banks are required to periodically verify the identities of clients through KYC checks, the most basic of checks.
Clearances for HNA on KYC from the four banks would mean they have satisfied themselves about the conglomerate’s identity and could pursue fundraisings and deals of HNA and its units, subject to other checks and requirements.
JPMorgan, UBS, Credit Suisse and Nomura declined to comment.
It is uncommon for a corporate entity to disclose KYC checks by banks or their results. HNA, however, has been scrutinized heavily on its ownership structure and the state of its finances after a $50 billion deal-making spree in the past two years. The move could be an attempt at reassuring its investors and business partners.
Reuters reported in September that Goldman Sachs had suspended its work on a planned fundraising and eventual U.S. listing for HNA’s IT outsourcing unit Pactera, after the deal failed to meet the bank’s KYC checks.
And while the group has gained regulatory approvals overseas, such as in Austria, it is still suffering pushback on its deals.
The Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals for potential national security threats, has not yet given its approval to a couple of deals by HNA, including its majority stake purchase in hedge fund investment firm Skybridge Capital. In December, New Zealand blocked HNA’s $460 million purchase of a local finance unit over the Chinese group’s ownership structure.
HNA’s use of leverage is also under the scanner. Its banking relationships have been put to test since last summer, as Beijing cracks down on what it deems are excessive deals.
China’s banking regulator in June ordered a group of banks to assess their exposure to offshore investments by a handful of acquisitive groups, including HNA, putting pressure on its finances.
Against a backdrop of concerns about its liquidity stress and rising financing costs, shares in several domestically listed HNA units have plunged earlier this week, while another seven subsidiaries, with a combined market value of $30.6 billion, have suspended trading, pending announcements.
The debt-laden conglomerate, though, received this week the backing of an executive of a unit of its main financier.
The head of the aviation leasing arm of China Development Bank said on Tuesday that HNA Group has solid airline operations and it would serve nobody’s interest to see it collapse. (Reporting by Julie Zhu in HONG KONG; Editing by Muralikumar Anantharaman and Mark Potter)