China Construction Bank announced tighter controls following the oil product debacle at Bank of China.
The state-owned bank upgraded its systems to prevent the risk of investment losses exceeding trade margins for commodity products following lessons learned from fellow «big four» lender Bank of China after oil prices fell into negative territory.
In addition, the bank will also roll over the contracts of some products based on market conditions to protect client interests.
«To protect your rights and interests, when international commodity market prices approach zero or when it is reasonable to expect a negative price, the bank will suspend all or part of the commodity account trading, and make adjustments on how to deal with contract expiration time and regulations,» a CCB statement said.
Industrywide Hit
China’s financial sector at large has been affected by unprecedented oil price movements and has led top authorities to commit to further tightening of risk controls.
Commercial bank sales of «wealth management products» that could potentially lead to «unlimited losses» were halted, according to a «Reuters» report citing unnamed sources, to prevent systemic failure.
