Citi had 'no choice' but to push for early repayment on Qingdao metal

Citigroup had “no choice” but to call for early repayment of its repo deals with trading company Mercuria following the discovery of fraud at Qingdao, Citi’s lawyer told a high court in London on Tuesday December 9.

Daniel Toledano QC made this comment during the bank's closing remarks in the case to decide which of the companies should face the $270 million exposure from financing deals linked to metal held at Qingdao, revealed after Citi called for the early repayment of the repo deals. “Citi was at great risk under a structure that was intended by both parties to loan finance,” Toledano told a court in London. The risk arose after Citi realised that it was unable to access its metal stored at Qingdao or Penglai after the ports were closed because of the fraud allegations, which drove the bank to issue a bring-forward event notice calling for early repayment. “Citi tried to negotiate with Mercuria and had no option but to take the decision it took,” Toledano said. Mercuria alleges that the reasons Citi sent the...

Published

Chloe Smith

December 11, 2014

11:35 GMT

London