HONG KONG, Aug 1 (Reuters) - The Monetary Authority of Singapore (MAS) has sought information from some Singapore-based lenders about their Chinese clients and loan exposure to China amid an investigation into a suspected commodity financing fraud at China’s Qingdao port.
The regulator sent a questionnaire to a number of banks in mid-July requesting data on their total China exposure by purpose and trade finance exposure, according to five Singapore-based banking sources. Lenders were also asked for details of their import and export commodities exposure.
The increased oversight by MAS of the huge commodity trade services industry based in Singapore suggests it is trying to build a picture of its net exposure to China’s sprawling commodity-backed financing sector, which has come under pressure this year due to slowing growth and a weak property market.
A spokesman for MAS, the city-state’s central bank and financial industry regulator, said it “does not comment on our internal operations”.
MAS routinely asks banks for details on their risk exposure and market conditions, but bankers said the questionnaire was unusual due to its depth and scope and that it required them to gather a lot of data.
It was conducted due to “recent adverse news and development concerning trade financing into China”, MAS said in an email to the banks. The email was read out to Basis Point, a Thomson Reuters publication, by two of the sources.
“We are guessing it has something to do with the situation in Qingdao. We have not received such questionnaires before. It is our first time,” said a banker who works in the corporate financing division of a Singapore-based Chinese bank.
One of the banks was requested to submit data on China deposits, wealth management and foreign currency exchange, while another handed in a list of its China clients, according to sources with direct knowledge.
Banks were asked to respond to the questionnaire by July 29, the sources said. The sources are from Singapore-based Chinese, Taiwan and Southeast Asia banks. They declined to be named due to the sensitive nature of the matter.
Chinese authorities launched an investigation in early June into whether a private metals trading firm, Decheng Mining, and its related companies, used fake warehouse receipts at Qingdao Port to obtain multiple loans secured against a single cargo of metal.
The financing probe at the world’s seventh-busiest port has left a string of global banks and trading houses scrambling to secure metal supplies. Standard Chartered is suing Chen Jihong, the Chinese businessman at the centre of the suspected fraud.
Other firms that have launched legal proceedings include Standard Bank, CITIC Resources Holdings Ltd and China’s Shanxi Coal International Energy Group . Banks such as StanChart, Citigroup and commodity trader Mercuria have disclosed exposures amounting to almost $1 billion. (Additional reporting by Rachel Armstrong in SINGAPORE and Melanie Burton and Sharon Klyne in SYDNEY; Editing by Alex Richardson)