Retail losses from Bank of China oil investment product could hit $1.3 billion: report

A dock worker wearing a face mask to prevent the spread of the coronavirus disease (COVID-19) looks at an oil tanker unloading crude oil at a port in Qingdao, Shandong province, China March 26, 2020. China Daily via REUTERS

SHANGHAI (Reuters) - Retail investors may have lost more than 9 billion yuan ($1.27 billion) from a structured crude oil product marketed by the Bank of China, financial news outlet Caixin reported on Sunday citing official sources.

More than 60,000 individual investors have lost deposits worth as much as 4.2 billion yuan, it said. A third of the total had invested more than 50,000 yuan each.

A spokesman for Bank of China declined to comment on the report when contacted by Reuters.

The Bank of China’s crude oil “bao” is sold to individual customers and linked to domestic and foreign crude oil futures contracts, including Brent and West Texas Intermediate (WTI).

The Bank of China last week settled trades after WTI futures prices fell below $0 for the first time, ending at minus $37.63 per barrel as traders paid to get rid of their oil.

The bank held between 24,000 and 25,000 long positions, with each position the equivalent of 1,000 barrels, leading to an estimated loss of 5.8 billion yuan, Caixin said.

The bank said last Friday that it was “deeply disturbed” by the losses incurred by its investors and blamed volatility in the global oil market brought about by the coronavirus pandemic.

Reporting by David Stanway, Emily Chow and Cheng Leng; editing by Kim Coghill and Jason Neely