Factbox: Potential losses in suspected China port metals financing fraud top $1.2 bln

GKE

29/08/2014 03:40

Aug 29 (Reuters) - Industrial and Commercial Bank of China 
 601398.SS , the country's largest bank, suffered a loss of less 
than $200 million to take a spot among the worst hit banks and 
trading houses impacted by a suspected fraud at China's Qingdao 
Port. 
    Chinese authorities in May launched an investigation into 
whether a private metals trading firm, Decheng Mining, and its 
related companies used fake warehouse receipts at Qingdao Port 
to obtain multiple loans secured against a single cargo of 
metal.  ID:nL4N0OS1XO  
    The exposure of banks and trading firms, including CITIC 
Resources Holdings Ltd  1205.HK  and Mercuria Energy Trading SA, 
could amount to more than $1.2 billion, according to an 
aggregation of amounts in company statements, reports and court 
documents. 
    Local media also said Decheng and its parent owed Chinese 
banks at least 16 billion yuan ($2.58 billion). Decheng has not 
commented on the probe.  
    * ICBC has suffered under $200 million in bad loans, the 
lender's president Yi Huiman said at a media conference in 
Beijing on Thursday.  ID:nL3N0QY4CN      
    * Also on Thursday, a unit of China's Shanxi Coal 
International  600546.SS  fired off a volley of new lawsuits 
over a metals financing fraud at China's Qingdao port, adding 
around $137 million in claims.  ID:nL5N0QY04C   
    The new suits include a claim for $89.8 million plus 
interest and costs against the Australian trading arm of China's 
Citic Resources Holding Ltd  1205.HK  for breach of contract. 
    The company has also launched action against Qingdao Port 
Group  IPO-QDPG.HK , the Chinese unit of Singapore logistics 
company CWT Commodities  CWTD.SI  and Winfair Resources Co. Ltd, 
a firm that specialises in alumina, aluminium and bauxite trade. 
    In a separate statement, it said it had filed for legal 
arbitration in disputes with units of Sinosteel for failing to 
deliver metal. Shanxi is claiming a total of $41.97 million in 
damages there. 
    The company said in June it was suing Decheng and its parent 
for more than $177 million in missed payments the two had 
guaranteed.  ID:nL4N0P81DX  
    * The metals storage unit of Glencore  GLEN.L , Pacorini 
Logistics, has launched two legal proceedings against Qingdao 
Port International  6198.HK  and its related companies claiming 
a total of $58.4 million for damages related to metal stored at 
the port. Pacorini said the port and relevant parties failed to 
deliver 8,085.189 tonnes of aluminium ingots and 112,731 tonnes 
of alumina, according to exchange statements.  ID:nL4N0QM028  
    * Commodities trading house Trafigura's warehouse business 
Impala initiated legal action against two units of U.S. bank 
Citi and trade house Mercuria Energy Trading in connection with 
suspected metals financing fraud at two of China's ports, 
according to a legal document.  ID:nL6N0QJ3JF  
    * ABN Amro Bank has sued Citic Australia Commodity Trading 
for making a wrongful claim for a metal cargo which the bank 
said it already owns the pledge right. The bank has asked the 
court to order Citic Australia to withdraw claims to the metal 
and to compensate the bank 1 million yuan ($162,680) for losses, 
according to exchange statements by Qingdao Port. 
    * HSBC has commenced wind-up proceedings against Zhong Jun 
Resources (S) Pte, the overseas arm of Decheng, after the firm 
defaulted on payments. Zhong Jun Resources owes the lender $4.3 
million, according to court documents.  ID:nL4N0Q53FZ  
    * Dutch state-owned bank ABN Amro  ABRGPA.UL  won an order 
in the Singapore Court for Chen Jihong, chairman of Decheng's 
parent company, to pay it $22 million owed under a loan 
agreement with Zhong Jun and another of his companies. 
    * Citigroup  C.N  said last month it has about $280 million 
in loans tied to commodities in two ports at the centre of the 
scandal. That is a big portion of its roughly $400 million worth 
of commodity financing deals in China.  ID:nL2N0PT24L  
    * Hong Kong-listed Citic Resources  1205.HK  has begun court 
proceedings against subsidiaries of Qingdao Port and is claiming 
losses of $108.1 million, according to exchange statements. 
    * Britain's Standard Chartered  STAN.L  said it had started 
legal action to claim about $36 million as part of a $40 million 
loan facility for Zhong Jun Resources, the Singapore arm of 
Decheng, a spokeswoman told Reuters.  ID:nL4N0PP2KE  
    * Standard Bank Group  SBKJ.J  said it has a total exposure 
related to the Qingdao port of about $170 million worth of 
aluminium and has started legal proceedings in Shandong 
province.  
    It also has an exposure of $40 million worth of aluminium at 
other bonded warehouse facilities in Shandong province and has 
started legal proceedings to secure its position. 
 ID:nL4N0PL2VU  
    * Mercuria had alumina worth about $44 million stuck at 
Qingdao port, according to four banking sources with direct 
knowledge of the situation.  ID:nL4N0PK1Ff  
    * Singapore-listed warehouse company GKE Corporation Ltd 
 GKEC.SI , a unit of trading house Louis Dreyfus, said in June 
that an investigation into the port fraud may affect the 
business of GKE (Shanghai) metal logistics. It has not stated 
the value of any potential exposure.  ID:nWNAS00451  
 
 (Reporting by Melanie Burton and Fayen Wong in Shanghai; 
Editing by Biju Dwarakanath) 
 ((melanie.burton@thomsonreuters.com; +612 9373 1803; Reuters 
Messaging: melanie.burton.thomsonreuters.com@reuters.net)) 
 
Keywords: CHINA QINGDAO/LOSSES