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Standard Bank has exposure to aluminium in bonded warehouses in Penglai, China, sources familiar with the matter told Metal Bulletin on Thursday July 10.
The company discovered the exposure during an audit of all of its base metals following the launch of a probe by Chinese authorities into the allegedly fraudulent use of warehouse receipts multiple times to raise finance.
The port of Qingdao has said that the investigation is focused on copper and aluminium.
Penglai and Qingdao are both in Shandong province, China.
The company at the centre of the investigation is Decheng Mining, which, along with its associated companies, used storage facilities in Qingdao and Penglai, people familiar with the matter said.
A spokesman for Standard Bank, which repeated that China remains a key market for the bank, declined to comment.
The legal proceedings by Standard Bank follow similar moves by Citic Resources Holdings Ltd and Shanxi Coal International Energy Group.
Earlier on Thursday, Standard Bank said that it had commenced legal proceedings in respect of aluminium held at a bonded warehouse facility in Qingdao port. It estimated its gross exposure in Qingdao to be $170 million.
It also said that it had a gross exposure of $40 million in respect of aluminium held at other warehouse facilities in Shandong province, but did not say where.
The bank is still assessing the financial consequences of the exposures and will provide an update in the group’s interim results, scheduled to be published on August 14. Standard Bank will continue to provide commodity financing and is committed to this business and its clients in this sector, it said.
Its copper financing business is unaffected, sources familiar with the matter said.
Andrea Hotter ahotter@metalbulletin.com Twitter: @andreahotter