June 5, 2014 / 12:15 PM / 3 years ago

UPDATE 1-StanChart suspends some metals financing in China-sources

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(Updates with comment from Standard Chartered)

HONG KONG/SYDNEY, June 5 (Reuters) - Standard Chartered has suspended new metal financing to some customers in China, three sources familiar with the matter said, as banks and trading houses review their exposure after a probe into trade financing at the port of Qingdao.

A Standard Chartered spokeswoman said the bank was reviewing financing to a small number of its clients.

"Specific to this incident, Standard Chartered is reviewing metals financing to a small number of companies in China," she said. The bank earlier said it was monitoring the situation in Qingdao.

A client of Standard Chartered was told by the bank that it had temporarily stopped giving "inventory financing" to new deals. The bank would not roll over existing deals when they expired, the Standard Chartered client said.

Another source based in Singapore, with knowledge of the situation, also said the bank had halted financing deals.

"It's official. Right now they don't renew financing deals...and stop financing new deals," said the source, who trades physical copper and ships it to China.

At least one other Western bank with operations in China is reviewing its exposure to copper and aluminium financing, a source with direct knowledge said.

Concern over the situation has extended to domestic banks. A Chinese state-owned bank had sent a team from head office to Qingdao to investigate trade financing problems, a source with direct knowledge of the situation said. (Reporting by Melanie Burton in Sydney, and Polly Yam, Xiaowen Bi and Hongmei Zhao in Hong Kong; Editing by Ed Davies and Mike Collett-White)

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