Chinese carmaker Geely, picked as the preferred bidder for Ford Motor's Volvo unit, is seeking at least $1 billion in loans from Chinese banks to back its $1.8 billion bid.

Li Shufu, CEO of Zhejiang Geely Holding Group

Three major Chinese banks planned to jointly extend loans to Zhejiang Geely Holding Group, including Bank of China, China Construction Bank and Export-Import Bank of China had.

Bank of China is China's top foreign exchange lender. China Construction Bank is the country's No 1 property lender. Export-Import Bank of China is a policy lender wholly-owned by the Chinese government and directly led by the State Council.

"Money is not a problem for Geely," said an unidentified source. "They definitely have strong support from Chinese banks and there are a number of private equity funds queuing up to invest in Geely."

The three Chinese banks mentioned above refused to comment on specific loans to clients.

Hangzhou-headquartered Geely, which means "lucky" in Chinese, is in need of modern and innovative technologies, which may be met by the Swedish brand, to upgrade its car lineup and tap the auto market.

Last month, Volvo's union leaders held their first talks with Geely but were still waiting to see Geely's financing plans for the loss-making Swedish carmaker.

Geely reached an agreement last week with Ford on intellectual property right (IPR) issues in its bid for Volvo, clearing a major barrier for the deal.

The remaining issues for Geely to negotiate with Ford, such as long-term strategy for Volvo's sales and production, would be much easier to solve, said an industry source close to Geely.

Geely also needs to build relations with Volvo's management, union leaders and the Swedish government, which are part of the negotiations.

Geely is one of China’s top ten auto manufacturers and also among the country’s top 500 firms. Established as an independent firm in 1986, Geely launched its auto manufacturing business in 1997 and is today a fully integrated independent auto firm with a complete auto eco-system from design and research and development to production, distribution and servicing. In 2005 Geely Automobile Holdings Limited was listed on the Hong Kong Stock Exchange and is responsible for the majority of Geely’s manufacturing operations.

Geely operates six car assembly and power-train manufacturing plants in China located in Lanzhou (Gansu province), Linhai (Zhejiang province), Luqiao (Zhejiang province), Ningbo (Zhejiang province), Shanghai and Xiangtan (Hunan province). These facilities enable a production capacity of approximately 300,000 cars per year. Ford Motor Co, seeking to raise cash to avoid a federal bailout, is in talks to sell its Volvo Car unit to Geely Automobile Holdings Ltd. Ford will likely get less than the $6.4 billion it paid for Volvo in 1999, which has shown great growth in the last few years with a revamped model lineup and a cleaner, sexier image.

By Xie Fang