UBS Loses $60 Million in Commodity Trade Finance Fraud Case

by Ship & Bunker News Team
Thursday October 22, 2020

Swiss bank UBS has lost almost $60 million in a commodity trade finance fraud case, the company said this week.

The lender has written off 54 million Swiss francs ($59.5 million) from its books because of this case, the company said in an earnings report.

The writedown was "related to a case of fraud at a commodity trade finance counterparty, which affected a number of lenders, including UBS," the company said.

"UBS's remaining exposure to this counterparty is minimal."

UBS has not named the counterparty involved.

The case comes as another blow to banks' confidence in commodity trade finance, with several cases close to the bunker sector having caused some lenders to retreat from this market over the past year.

The financial troubles of Hin Leong Trading -- owners of Ocean Bunkering, historically one of Singapore's largest marine fuel suppliers -- as well as the demise of bunker supplier Inter-Pacific Petroleum Pte, were cited as part of Societe Generale's reasoning for shuttering its Singapore commodity trade finance unit in August.

And the more recent problems at GP Global are said in part to have been behind BNP Paribas's halt on new trades in this area, according to Bloomberg and Ship & Bunker sources.

If the money withdrawn by the banks from commodity trade finance is not replaced by new entrants to the market, credit conditions are likely to tighten further in the bunker industry, particularly for smaller players.