In the second quarter of 2020, revenues in the commodity trade finance sector fell by 40% to USD 700 million, according to figures from data provider Coalition. So far, in 2020 revenues have dropped by 29% to USD 1.7 billion. Scrutiny has increased around the world of commodities finance, following some high-profile losses and scandals. Singapore-based Hin Leong Trading filed for bankruptcy in April 2020, leaving 23 banks reportedly owed around USD 4 billion, with HSBC losing USD 600 million.
Dutch bank ABN Amro also took losses, announcing at its results in May a USD 225 million impairment related to potential fraud in its trade and commodity finance business in Singapore. The lender said it was completely closing its commodity and trade finance operation, as part of a wider overhaul of its corporate and investment bank. In May 2020, Dubai-based Phoenix Group racked up losses of USD 450 million, with HSBC and Standard Chartered facing millions in losses as a result.
Meanwhile, BNP Paribas has frozen new commodity trade finance deals amid losses, and is reviewing the future of the unit in the Europe, Middle East and Africa region, while Societe Generale has closed its unit in Singapore after losses related to Hin Leong.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now