A Case Study Of HNA Group’s Credit Risk Contagion From The Perspective Of Related Guarantees

As production and capital concentration increase,conglomerates appear more and more frequently.Mutual guarantees between member companies in an enterprise group can effectively alleviate the financing constraints of internal members,increase the scale of enterprise financing,and play a positive role in promoting group operations.But on the other hand,the cross-complicated affiliated guarantees among member companies may also lead to excessive use of credit and risk out of control,which may spread to other member companies along the chain of affiliated guarantees,showing a "domino effect".Based on the perspective of related guarantees,this paper selects HNA Group as the research object,and uses the case study method to analyze the credit risk contagion mechanism and risk contagion performance of HNA Group,the causes of credit risk,the path of credit risk contagion and the reasons for risk contagion,and gives effective suggestions for the actual situation of the group.The study found that due to HNA Group adopting a diversified M＆A strategy and frequent debt acquisitions,the group has a high asset-liability ratio and poor profitability,and credit risk has long been lurking within the group.With the tightening of macro policies and the impact of the new crown epidemic,the group’s financing difficulty has increased and a liquidity crisis has occurred.Credit risk spreads to related parties through the related guarantee chain within the group.Cross guarantees and super-capacity guarantees between member companies and the group lead to excessive debts of the enterprise group and magnify the credit risk.The joint liability guarantee often used between related parties is also certain.To a certain extent,the contagion of credit risk has been accelerated.Therefore,this paper puts forward the following suggestions from the two levels of enterprise groups and financial institutions:enterprise groups should establish a risk early warning mechanism for related guarantees to detect and prevent risks in a timely manner;rationally use related guarantees,and do not easily provide joint and several liability guarantees;improve the group’s internal control system and Information disclosure system and optimize internal governance structure.Financial institutions should follow the "one debtor" principle when making loans,and grant credit to enterprise groups in a unified manner;in the selection of guarantee methods,they should strengthen property guarantees to prevent the risk of credit expansion caused by related guarantees;strengthen post-loan management,and timely identify potential risks.