HSBC faces more oil-linked headwinds as it files to place oil trader Zenrock Commodities Trading under judicial management.
A Singapore-based trader of crude, oil products and petrochemicals, Zenrock’s management could risk being ousted through a debt restructuring process in which a third party runs the company. This is due to allegations that the firm used the same oil cargo as collateral for multiple credit facilities, accordion to a «Bloomberg» report citing unnamed sources.
Zenrock is believed to have access to trade financing via around nine banks including OCBC, Natixis, Credit Suisse and Citi, in addition to HSBC. The British lender has proposed that KPMG lead the judicial management process, the report added.
Oil Troubles
Zenrock becomes the latest potential oil-linked hit to global bank balance sheets after fellow Singapore trader Hin Leong admitted to undisclosed losses which has caused distress to nearly $4 billion of loans from some 23 banks – including $600 million from HSBC, the largest lender.
In the first quarter this year, HSBC missed analyst forecasts and registered a 48 percent plunge in year-on-year profits. The bank primed shareholders to expect «materially lower profitability in 2020» and increased loan provisions by $2.4 billion.
