Standard Chartered Plc has taken a US$175 million provision to cover its exposure to suspected commodities fraud in China, Reuters reported Wednesday.
“We believe that in the provisioning we have taken we have taken a very conservative approach. Our exposure in the warehouses around Qingdao is around US$250 million in total,” Chief Executive Peter Sands was quoted as saying Wednesday after the bank unveiled its first-half results.
“We have looked at all our commodities-related exposures in China and elsewhere, and our sense is this … is a particular problem related to some particular individuals and companies in one location,” Sands said.
Chinese authorities began an investigation in May to determine whether metals trading firm Decheng Mining and related companies used fake warehouse receipts at Qingdao Port to obtain multiple loans secured against a single cargo of metal.
According to court documents seen by Reuters last month, StanChart is suing Chen Jihong, the Chinese businessman at the center of the suspected fraud at Qingdao port, joining a list of companies which have taken legal action to try to reclaim losses.
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