Many banks in Singapore have come to a common agreement of proposing new guidelines in order to promote transparency and improve lending practices in the commodity sector.
Nearly 20 banks with their commodity trade finance chiefs have formed a working group to propose new rules.
By developing a set of best practices, the aim is to enhance commodity financing standards in the city-state, as per a joint statement by Monetary Authority of Singapore (MAS), Enterprise Singapore (ESG), the Association of Banks in Singapore (ABS), and the Accounting and Corporate Regulatory Authority (ACRA) to mark Singapore as a global oil trading hub.
To curb the reduction of trade volumes in the city-state, several banks have already made their credit tight and stepped up their inspection of existing loans at commodity firms.
Oil traders including Hin Leong Trading Pte Ltd and others faced fraught with risk with the slump in fuel prices and demand.
Reportedly, 23 banks like DBS, HSBC, ABN AMRO, and OCBC, Societe Generale are owed a sum total of US$3.8 billion by Hin Leong Trading, whose founder admitted to hiding over USD 800 million in losses over many years.
The working group also comprises many European lenders, as per sources.
