Geely, the Chinese carmaker picked as the preferred bidder for Ford Motor's Volvo unit, is seeking at least $1 billion in loans from Chinese banks to finance its $1.8 billion bid, sources said yesterday. [see development of Geely's bid for Volvo]

Homegrown Geely, which means "lucky" in Chinese, is hungry for modern and innovative technologies from the Swedish brand to upgrade its cars and tap China's huge auto market.

At least three major Chinese banks including Bank of China, China Construction Bank and Export-Import Bank of China had agreed to extend loans to Zhejiang Geely Holding Group, said the banking sources briefed on the plan. "Money is not a problem for Geely," said a source. "They definitely have strong support from Chinese banks and there are a number of private equity funds queuing up to invest in Geely."

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

Geely declined to comment. All three Chinese banks involved declined to immediately comment on the matter.

The loans backing Geely's bid for Volvo are expected to have a five-year tenor, said another of the sources, who declined to be identified. Currently, no foreign banks are involved but it is possible Geely may tap one or two foreign banks for some lending contributions, said the sources.

Standard Chartered and HSBC Holdings Plc are Geely's principal banks, according to its annual report.

Bohai Industrial Investment Fund, a private equity fund backed by the Chinese government, was also in talks with Zhejiang Geely Holding Group, to support its bid for Volvo, said the sources.

However, no agreement between Bohai and Geely had been reached and Bohai's investment would only be a small part of Geely's acquisition of Volvo, said the sources.