January 23, 2022

Unilever and 3M will be able to provide loans in China

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Unilever and 3M will be able to provide loans in ChinaUnilever and 3M will be able to provide loans in China

Shanghai has compiled a list of firms, including local subsidiaries of multinational companies Unilever PLC and 3M Co, that are eligible for millions of dollars in subsidized loans to mitigate the damage from the coronavirus outbreak, according to information received from bankers and official documents by Reuters..

For three weeks, China has isolated entire cities and suspended transport links in an effort to slow the spread of the virus, with negative consequences for the economy..

Several lenders in Shanghai received a list of companies compiled by the Shanghai branch of the Ministry of Industry and Information Technology (MIIT) and the National Development and Reform Commission (NDRC), agency sources say..

«Every bank in Shanghai rushes to lend to companies on its list to earn political points», – said one banker who saw a list of 194 firms, including restaurants and real estate developers.

Other banks received shorter versions of the list.

Companies have the opportunity to apply to be added to the general list. According to bankers, each lender independently determines whether the company is suitable for him and whether to offer it financing..

Companies that manufacture medical products and are «backbone enterprises», providing daily needs are eligible for special loans, according to a notice on the Shanghai MIIT website.

China is grappling with nationwide drug shortages, from face masks to protective suits, while hospitals in central Hubei province – the epicenter of the outbreak – grapple with hundreds of new cases a day..

Reuters audited bank lists include 3M Medical Devices and Materials Manufacturing (Shanghai) Co Ltd, Unilever (China) Co Ltd, and Shanghai Kindly Enterprise Development Group Co Ltd and Tellgen Corp..

The list does not indicate that the proposed loans will necessarily be in demand or that such firms need any financial support.

Bank of Shanghai Co Ltd told Reuters it will provide 5.5 billion yuan ($ 786 million) to 57 firms on its list.

To date, 430 million yuan has been issued at an average interest rate of 2.65%, the bank said. With subsidies, the borrower pays only 1.32%.

Under a similar program in Beijing, companies have requested bank loans totaling at least $ 8.2 billion, Reite reported earlier this month..

The Shanghai government said the loans are intended to provide financial support to key companies helping to prevent and fight the epidemic..

Shanghai authorities are compiling a list to help the central bank, the People’s Bank of China (PBC), channel 300 billion yuan of cheap loans to companies affected by the coronavirus epidemic across the country.

Shanghai-based medical device maker Derlar has announced its participation in the funding program, Derlar’s finance officer named Shen said, adding that the firm has yet to receive any money..

Shanghai Kaibao Pharmaceutical Co Ltd, also listed, said it has not received a loan yet. An employee of the firm’s finance department named Ren added that he would provide more details if the money is received..

Banks that received a list of potential borrowers include Shanghai branches of Ping An Bank Co Ltd, China CITIC Bank Corp Ltd, China Guangfa Bank Co Ltd, China Merchants Bank Co Ltd, Shanghai Huarui Bank and Bank of Ningbo Co Ltd.

MIIT, NDRC and NBK did not respond to Reuters requests for comment.

A spokeswoman for Unilever said the company «currently does not plan to apply for financial support».

3M and other listed companies including Shanghai Kindly Enterprise Development Group and Tellgen did not respond to requests for comment.

One Shanghai-based face mask maker on the list will not pay interest on a loan from the Shanghai branch of the Bank of Ningbo if government subsidies are taken into account, a source familiar with the matter told Reuters..

Shanghai-based Roche Pharmaceuticals Ltd, a division of the Swiss pharmaceutical company Roche Holding AG, has also been listed for concessional loans. The official said that «the company did not apply for loans».

After banks issue loans, they can request more funds from the central bank, according to the NBK website.