The planned multi-billion dollar sale of the Hong Kong headquarters of the sluggish Chinese real estate giant Evergrande has failed for the time being. The state owned real estate developer Yuexiu Property has withdrawn from the talks given the difficult financial position of the company, as two people familiar with the matter reported. A purchase of the building complex for the equivalent of $ 1.7 billion had been negotiated. Evergrande and Yuexiu left requests for comment unanswered. China's central bank tried on Friday to allay fears of the greater impact of the Evergrande crisis.

The failure of the negotiations is another setback for Evergrande. The company is sitting on a mountain of debt of more than $ 300 billion and has already missed several deadlines for due interest payments to its bondholders. Given the size of the debt, there are concerns that a collapse of Evergrande could spark a conflagration in China's real estate sector.

According to insiders, Yuexiu was close to closing the deal as early as August.

But the management of the real estate developer based in the metropolis of Guangzhou has opposed an agreement.

The reason was fears that the unresolved debt situation at Evergrande might stand in the way of a smooth conclusion of the transaction.

Evergrande acquired the 26-story Evergrande Center in the Wan Chai district of Hong Kong six years ago for the equivalent of $ 1.61 billion.

China's central bank is trying to calm down

Meanwhile, China's central bank tried to allay fears that the Evergrande crisis could affect the banking industry. "Individual financial institutions are not exposed to any great risk and the spill-over effect on the financial sector is controllable," said the head of the financial markets department of the central bank, Zou Lan, at a briefing. The group has blindly diversified and expanded its businesses, he criticized. Evergrande is said to accelerate asset sales and resumption of construction projects. Authorities would intervene to provide financial support for projects.

The Evergrande crisis has meanwhile also called on the accounting supervisory authority in Hong Kong.

The Financial Reporting Council (FRC) is taking a close look at the 2020 annual financial statements and the 2021 half-year report of the real estate giant, as it announced on Friday.

The audit of the 2020 annual financial statements by PwC will also be examined.

The supervisors are concerned with whether the accounting of the group and the audit report from PwC were appropriate.