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After port fraud, China's vast warehouse sector under scrutiny
By Melanie Burton and Fayen Wong
Reuters
Sunday, June 22, 2014
Shaken by a fraud investigation into metal financing in the world's seventh-busiest port, banks and trading houses have been made painfully aware of the risks they face storing commodities in China's sprawling warehouse sector.
The probe at Qingdao port centers around a private metals trading firm suspected of duplicating warehouse certificates in order to use a metal cargo multiple times to raise financing.
Some banks have asked clients to shift metal, used as collateral for loans, to more regulated London Metal Exchange warehouses outside China or those owned and operated by a single warehouse firm to limit their exposure.
"The banks still haven't looked under the hood," said an executive at a bank involved in commodity financing in China, referring to China's warehousing sector. ...
... For the full story:
http://www.reuters.com/article/2014/06/22/us-china-qingdao-warehouses-id...
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