HSBC the Latest Bank to Warn over Qingdao Metals Fraud Investigation

HSBC has become the latest bank to announce that it will be closely monitoring transactions involving Qingdao port, as the investigation into fraudulent activity there continues.

The bank follows Standard Chartered, Standard Bank and Citi in vocalising concerns over the metal financing scandal engulfing the port, which floated on the stock exchange earlier this month.

Investigators are looking into reports that a company used a single shipment of metals to take out multiple instances of commodity financing.

In a statement issued to IBTimes UK, a HSBC spokesperson said: "We continue to provide commodities financing support to our customers. Recognising the uncertainty of the situation in Qingdao, we are thoroughly assessing each transaction on its own merits, taking into account the interests of our customers, the bank and its shareholders."

Police have focused the investigation on private metals trader Decheng Mining, a Qingdao-based subsidiary of Singaporean-chaired Dezheng Resources.

Standard Chartered last week suspended some metals financing, pending the results of the investigation.

Meanwhile as companies and banks become more cautious in their dealings with Qingdao, others are hoping to capitalise.

Commodities traders in Hong Kong are hoping to benefit from fears over governance in Mainland Chinese ports and warehouses.

London Metal Exchange (LME)-licensed warehouses in Hong Kong, Korea and Taiwan are said to be on standby to host an influx of metals from the Mainland. LME safeguards are thought to be more stringent than those in China.

CITIC Resources, a metals trader, last week warned that it is looking at the alternative options available to it for the storage of cargoes, after its shares plunged 8% on the back of the Qingdao investigation.