ABN Amro Bank NV has become the latest lender to make a claim against a Singapore oil trading giant that filed for protection from creditors amid a plunge in oil prices.
The Dutch bank filed applications for charges related to irrevocable letters of credit tied to goods and documents of Hin Leong Trading Pte Ltd (興隆貿易), filings with Singapore’s Accounting and Corporate Regulatory Authority showed.
The Amsterdam-based lender is the second bank to file charges linked to Hin Leong, which owes almost US$4 billion to more than 20 Singaporean and international banks, including HSBC Holdings PLC, DBS Group Holdings Ltd and Standard Chartered PLC.
London-based HSBC has the most exposure to the oil trader, with about US$600 million, people familiar with the situation said.
Hin Leong, founded in 1963 by Chinese tycoon Lim Oon Kuin (林恩強), filed the application for a debt moratorium from Singapore’s High Court on Friday, people with knowledge of the matter said.
Lim Chee Meng (林志明), the only son of Lim Oon Kuin, said the Singapore-based company had suffered about US$800 million in losses from futures trading that were not reflected in its financial statements, people with knowledge of the matter said.
Lim Chee Meng said he was unaware of the losses suffered over some years and his father had instructed Hin Leong’s finance department to omit them from its financial statements, said people with knowledge of an e-mail sent on Friday by the shipping arm of Hin Leong, Ocean Tankers Pte Ltd (新加坡海洋油船), notifying recipient parties of proposed moratorium proceedings.
Lim Chee Meng said the company also sold some of the million of barrels of refined products it had used as collateral to secure loans from its banks, the people said.
As a result, the company faces a significant shortfall between the oil stocks it held and the inventories pledged to its banks. That potentially means huge losses for the banks that provided the merchant with billions in loans as the collateral they thought they have as a guarantee is not there.
ABN Amro did not specify the amount owed to the bank in the documents dated Friday. The charges covered include Hin Leong’s bills of landing, air waybills, cargo and warehouse receipts, as well as the goods shipped related to the bank’s credit.
An irrevocable letter of credit cannot be canceled or amended by the issuing bank without the agreement of the parties in the credit transaction.
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