Bank limits copper finance after ICBC moves to defer payment against LC

At least one western bank has stopped discount financing of copper into China after Industrial & Commercial Bank of China (ICBC) applied for the right not to settle a letter of credit it issued earlier this year, as a result of the Qingdao investigations, sources told Metal Bulletin.

This is a new development in the fallout from the Qingdao warehousing scandal, in which Chinese firm Decheng Mining allegedly used false warehouse receipts to gain multiple loans from banks. ICBC’s request for the right not to make this payment is a move that is lawful in the country in cases where there are concerns about fraud. It is the latest legal move by parties that may have exposure to the Qingdao fraud to try to protect their interests, sources said. But if the move was granted, it would be likely to leave its counterparties out of pocket, and would risk a renewed ratcheting-up of concerns about copper financing. The western bank, which was not an ICBC counterparty in the deal to which the injunction applies, has responded by ceasing to do some forms of copper financing that would leave it open...


July 16, 2014

16:14 GMT