The HKMA is investigatingChina Citic Bank Internationalfor financing large scale overseas asset purchases by Chinese conglomerates that are under scrutiny for circumventing mainland capital controls, the FT reports.
A team from HKMA has been sent to China Citic to probe overseas borrowing activities from companies such as airline and finance provider HNA and real estate developer and former part SeaWorld owner Zhonghong Zhuoye.
The HKMA's probe into the bank started last year and continued for several months, the FT said, adding that the regulator was accompanied by big four auditors.
In an inquiry, Citic Bank International said there were no investigations into its offshore financing activities, adding that it always operates in compliance with relevant laws and regulations.
Since 2017, the Chinese government has been looking into large scale asset purchases overseas by such companies - including HNA Group, property developer Zhonghong Zhuoye and manganese producer Ningxia Tianyuan - whose overseas asset purchases are said to have been financed by Hong Kong banks after mainland capital controls were tightened at the end of 2016.
In 2017, HNA was forced to sell more than $20bn in global assets and Zhonghong was delisted from the Shenzhen Stock Exchange for poor performance.
According to the report, anonymous sources claimed that Citic Bank International has since moderated its desire to grow its investment banking arm.