China Bank Backs Off 15-U.S. Cent Credit Limit for LeEco Staff
China Construction Bank Corp. (CCB) has restored the credit limits on some credit cards belonging to employees of LeEco after unilaterally cutting the limits to 1 yuan ($0.15) while it conducted credit-risk assessments on the cardholders.
CCB is the latest financial institution that has grown more vigilant toward the cash-strapped technology company. China Merchants Bank received approval from a Shanghai court in June to freeze LeEco assets that were pledged as collateral in 2015 for a 2.4 billion yuan loan.
Sources said CCB’s action was an internal risk management decision. The bank said in a separate statement late Wednesday that it has restored the credit limit on 95% of the LeEco employee-owned CCB credit cards that have passed its internal assessment. The remaining 5% of cardholders are undergoing further assessment, the bank said, without disclosing additional details.
The credit-limit cut was brought to light on Tuesday by Bai Yunfei, a former product manager of LeEco’s listed unit Leshi Internet Information & Technology Corp., who shared his credit status on a personal social media account.
Bai’s credit limit was cut from 78,000 yuan ($11,548) to 1 yuan on Tuesday, he said. A CCB customer manger informed him that the operation was “related” to his former employer LeEco. Bai’s credit limit was restored Wednesday afternoon, he said after posting a screenshot of his credit status.
So far, no other bank has suspended credit lines for current or former LeEco employees. But some banks told Caixin they have rated LeEco employees as high-risk debtors, which means they probably won’t be granted as high a credit limit the next time they apply for a credit card.
LeEco has had a cash shortage since October following years of aggressive investments to expand its business into smartphones, online video, entertainment and electric cars.
In July, about 10 Chinese mutual funds slashed the value of their holdings of LeEco’s Shenzhen-listed arm by about one-third, as they sensed LeEco’s fall is eating into their returns.
Contact reporter Leng Cheng (email@example.com)
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