The 364-day, US$210mn secured facility covers import finance as well as the funding of inventory, receivables, and hedging positions for the trading business of its wholly owned subsidiary, BB Energy Asia.

The deal was oversubscribed, having initially launched at US$150mn. Natixis CIB acted as facility and security agent, while the other participating banks were Abu Dhabi Commercial Bank, Apicorp, Arab Banking Corporation, Crédit Agricole CIB and MUFG.

Komgo acted as digital agent for the transaction. The deal’s participants used the Swiss fintech’s smart document solution, Trakk, as a one-stop, verifiable source for all syndicate members, removing the need for wet ink signatures and enabling paperless transactional drawdowns, mark-to-marketing, verification of signers, and processing of collateral in a digital format.

Meanwhile, using SGTraDex’s data highway, BB Energy exchanges essential documents through Komgo’s platform, streamlining borrowing base drawdown with financing banks.

“The facility is underpinned by a cutting-edge digital trade platform through our partnership with Komgo and SGTraDex, reflecting BB Energy Group’s commitment to transparency and operational integrity,” says Anbu Ramasamy, regional CFO for Apac at BB Energy Asia. “Embracing digitalisation is paramount to a strong governance and gives liquidity providers confidence to extend financing more securely and efficiently.”

This is the first transaction to be completed under a memorandum of understanding signed between BB Energy Asia, Komgo and SGTraDex in August, which the trio said at the time would “pave the way for an industry-wide shift to efficient, more transparent structured trade finance operations” and provide “unparalleled verifiability, fraud detection and risk mitigation capabilities”.

Launched in June last year, SGTraDex is a public-private initiative that seeks to connect ecosystem partners in the local and global supply chains via a common data infrastructure. Using APIs, it facilitates the mobility of information between various parties involved in trade, which otherwise would typically be unavailable or cumbersome to access – enabling them to detect issues such as the use of bogus documents or attempts by companies to fraudulently obtain financing twice from the same cargo.

“SGTraDex provides the essential data exchange infrastructure, ensuring security and interoperability, allowing all parties to be connected to the larger ecosystem in a more efficient and secure manner,” says Kelvin Ling, head of business development and operations at SGTraDex. “This is a significant development in the industry which showcases that digitalisation can bring about enhanced connectivity and foster trust and transparency in trade.”

The facility is the latest of several involving Komgo. In 2021, the fintech came in as digital agent on BB Energy’s first US digital borrowing base facility, worth US$500mn, which the trader topped up last month. Meanwhile, in May this year, it was involved in a US$175mn Asia Pacific energy transition borrowing base facility for commodities trader Mercuria, as well as a US$600mn facility in support of Gunvor Singapore’s Asian oil business.

The post BB Energy Asia, Komgo and SGTraDex complete first digital borrowing base facility appeared first on Global Trade Review (GTR).

In a judgement handed down on October 24, the Singapore Court of Appeal overturned a ruling made last year dismissing Crédit Agricole’s claim against PPT Energy over a US$23.6mn letter of credit applied for by ZenRock in PPT’s favour.

In the new judgment, the court found that PPT breached promises it made to Crédit Agricole in a letter of indemnity (LOI) and that it must return the funds paid to it by the French lender under the letter of credit.

ZenRock collapsed in May 2020 after HSBC moved to have the trader placed under judicial management following the discovery of what the bank described as “extremely suspicious” financing practices. In June last year, Singapore police charged ZenRock’s ex-president with cheating, forgery and criminal breach of trust, partly for allegedly cheating Crédit Agricole out of US$17mn.

The dispute is among many that have played out in the Singapore courts since the collapse in 2020 of large commodity traders such as ZenRock, Hin Leong and Agritrade, which have since faced allegations of systematically raising fraudulent financing from a raft of major trade finance banks.

Like many of the transactions now being dissected in litigation, the deal at the heart of the dispute between Crédit Agricole and PPT included a lengthy chain of parties buying and selling a cargo of oil.

In early 2020 ZenRock applied to the bank for a letter of credit in favour of PPT Energy, from which it was buying a cargo of Congolese oil. It then intended to sell the oil to Totsa, the trading arm of French energy giant Total.

But according to the judgement, ZenRock concealed from Crédit Agricole that the deal was part of a circular trade and that the cargo was already pledged to another lender, ING, as part of a transaction further up the chain.

ZenRock also furnished Crédit Agricole with a doctored sale contract which made it appear the company would be selling the oil at a US$3.60 per barrel premium, when in reality it was a US$3.60 per barrel discount.

The judge in the original case found that while PPT Energy was not an “innocent bystander”, it did not have direct knowledge of ZenRock’s fraud and therefore the fraud exception to Crédit Agricole’s obligation to pay out through the letter of credit was not engaged.

Instead of contesting this aspect of the ruling, Crédit Agricole won its appeal because the court accepted its arguments that the previous judge erred in finding that PPT had not made or broken a warranty in the LOI that the trader had provided to the bank in place of the original bills of lading.

The initial judge found that the LOI never came into effect because the bank did not make the payment by the due date.

But the appeals court found that the LOI was valid from the moment it was issued.

In the LOI, PPT confirmed it had “marketable title” over the oil. But the judges described evidence from PPT traders in the original trial as “unbecoming and redolent of PPT’s lack of good faith”. They found “there are well-founded concerns about the marketability of the title held by PPT from these circumstances alone” and that the trader was not a “bona fide purchaser”.

PPT knew that its promise in the LOI that the goods were “free and clear of any lien or encumbrance” was not correct because it was aware that another lender, ING, also had a floating charge over the goods, the judges found. This is because ZenRock had separately attempted to raise financing from that bank using the same cargo.

“In sum, we conclude under this issue that there was a breach of the warranty in that PPT lacked a marketable title,” the judges wrote.

However, the court roundly dismissed the second plank of Crédit Agricole’s appeal, in which the bank pointed to previous cases where lenders had successfully argued that fraud by letter of credit applicants had impugned on an obligation to pay, even if the beneficiary was not party to the wrongdoing.

The judges found those cases did not support the bank’s arguments, which they said inappropriately fused the separate contractual obligations a bank has with the applicant and the beneficiary in a letter of credit transaction.

“The fundamental problem with [Crédit Agricole]’s case on the letter of credit is that it would, if accepted, significantly undermine the whole system of documentary credits,” they wrote.

“The effect would be that no seller-beneficiary could be assured of payment under a letter of credit, without investigating the integrity of the issuing bank’s customer in its relationship with the issuing bank, which is a practical impossibility, or without seeking some further contractual protection or insurance against the risk that the issuing bank’s customer may have misled the issuing bank. Therefore, we unhesitatingly reject [Crédit Agricole]’s appeal in relation to the letter of credit.”

Although Crédit Agricole paid the proceeds of the letter of credit to an escrow account in 2020, it has since trimmed its claim and made a US$6.2mn recovery in related proceedings, meaning it has been awarded only US$10.3mn.

Crédit Agricole declined to comment on the judgment. A lawyer representing PPT did not respond to a request for comment.

Following another recent ruling in favour of OCBC in similar circumstances, the judgment further highlights the risks to participants in circular trades, says Baldev Bhinder, managing director of law firm Blackstone & Gold.

“The message for traders arising from both Winson Oil vs OCBC and the recent PPT case is the same: those that insert themselves into string chains, choosing not to seek clarifications as to the title they allege to be passing when circumstances dictate otherwise and instead relying on the comfort of the LC for payment, run the risk of being out of pocket, either by a reckless indifference fraud exception under the letter of credit or a breach of warranty as to marketable title under the LOI.”

Bhinder says it is disappointing Crédit Agricole chose not to appeal the lower court judge’s verdict that PPT did not have “reckless” disregard to the truth when it sought payment under the letter of credit.

“It may be somewhat of a missed opportunity to clarify the fraud test in the highest court of the land,” he says, particularly considering the decision in Winson Oil vs OCBC. In that case, the court found Winson had acted with recklessness and explicitly disagreed with the consideration of “recklessness” in the original decision in the Crédit Agricole case.

The post Crédit Agricole wins appeal in ZenRock fraud suit appeared first on Global Trade Review (GTR).

Seven in 10 Asian companies expect to see rising demand for their products and services in the coming months, according to the latest edition of the Atradius Payment Practices Barometer for Asia, a poll of 1,800 businesses across China, Hong Kong, Indonesia, India, Japan, Singapore, Taiwan and Vietnam carried out during Q2 and Q3 this year.

The survey also revealed a strong commitment to address the challenges posed by deteriorating business-to-business (B2B) payment practices, which are reflective of the vulnerabilities affecting the global economy and marketplace.

More than 50% of companies in the region said they have increased efforts to collect overdue B2B invoices during the past 12 months, and this is bearing fruit: late payments across Asia declined by 12% over the past year, while bad debts fell to 5% of all B2B invoiced sales, from 7% in 2022.

In addition, companies opting to sell on credit are granting longer payment terms to B2B customers as a means to help them navigate cashflow difficulties, Atradius found, with these terms now averaging 60 days from invoicing. Meanwhile, almost half are turning to trade credit insurance to bolster their risk management framework.

“The flexible approach to credit management demonstrated by Asian businesses, which involves trade credit insurance for 47% of companies polled, is particularly relevant because it enables them to seize opportunities in a growing market while safeguarding against potential credit-related risks in B2B trade activities,” says Andreas Tesch, Atradius’ chief market officer. “[This] showcases their resilience and forward-thinking approach to business operations and cash flow risks mitigation.”

The findings by Atradius are in line with the World Trade Organization’s forecasts for the region’s trade over the next year. The supranational body currently expects Asia’s trade growth to fall below an already sluggish global average for the second year running this year. However, for 2024, it predicts Asia will roar back to life, with a world-beating 5.5% increase in exports.

The post Asia’s businesses boost efforts to unlock trapped working capital ahead of expected demand surge appeared first on Global Trade Review (GTR).

The global commodity trader closed two 365-day facilities: one US$620mn revolving credit facility and a CNH term loan, equivalent to US$1.17bn.

The two deals were slimmed-down equivalents of loans that closed last year at US$685mn and US$1.22bn respectively, which the new lending is helping to refinance.

Trafigura has also closed a US$930mn three-year term loan, a significant boost on the US$278mn loan it received in 2020 and which this deal also refinances.

In addition to refinancing, all three facilities will also be used for general corporate purposes.

“We have successfully refinanced our Asian unsecured syndicated facilities with more than US$500mn in additional liquidity,” says Trafigura group chief financial officer Christophe Salmon.

“This increase fully relates to the three-year USD term loan, demonstrating robust support for the company’s strategy, governance and ability to deliver strong results through different commodity and credit cycles.”

Explaining the slight shrinking of the one-year tranches and widening of the three-year tranche, a Trafigura spokesperson tells GTR that some banks opted to re-balance their exposures in favour of the facility with the longer tenor.

The total financing package was oversubscribed by around US$700mn, the trader says, with four new banks joining.

The mandated lead arrangers and bookrunners are: Abu Dhabi Commercial Bank, Agricultural Bank of China, Bank of Communications Shanghai sub-branch, Bank of Communications Singapore branch, China Construction Bank, DBS, Development Bank of Japan, First Abu Dhabi Bank, Industrial and Commercial Bank of China, Oversea-Chinese Banking Corporation and Standard Chartered.

Standard Chartered is the global co-ordinator while DBS and First Abu Dhabi Bank are the sustainability co-ordinators.

The Export-Import Bank of China is the mandated lead arranger and bookrunner on the syndication of the CNH tranche.

22 lenders participated in the US dollar-denominated tranches, while 14 took part in the CNH portion of the package.

The deal is tied to the same sustainability targets as those in the trader’s European syndicated financing which closed earlier this year. They include trimming scope 1 and 2 emissions, responsible sourcing of metals and growth in the company’s renewable energy portfolio.

The post Trafigura boosts Asian credit facilities to US$2.7bn appeared first on Global Trade Review (GTR).

Last year JP Morgan successfully fended off a lawsuit brought by Singapore’s Kuvera Resources, with a judge finding that the lender was entitled to decline payment for a US$2.4mn shipment of coal because the vessel involved may have been Syrian-owned and subject to far-reaching US sanctions on the country.

But Singapore’s Court of Appeal on September 28 instead decided in Kuvera’s favour, ruling that JP Morgan did not prove to an acceptable standard of proof that the vessel was in fact under Syrian ownership at the time of the trade. Instead, the court found the bank’s decision to reject payment was based on its own risk management calculations due to the presence of “red flags” that suggested a connection with Syrian entities.

The proceedings have been described by the judge in the first trial as a “test case” for the use of sanctions clauses, controversial additions to LCs which theoretically allow banks to reject payment if a transaction could result in a violation of sanctions rules. They have mushroomed in trade finance as sanctions gain wide usage as a foreign policy tool by the US and its allies.

The trade at the heart of the case was Kuvera’s sale in July 2019 of 35,000 metric tonnes of Indonesian coal to an unnamed buyer in Dubai, receiving payment from the buyer in the form of two irrevocable LCs, which were issued by the buyer’s bank.

Kuvera selected JP Morgan as the confirming bank for the LCs. But when the bank submitted the transaction to its sanctions screening process, it found that the ship carrying the coal, the Omnia, was on its “master list”, an internal list of entities that have a sanctions “nexus”. It did not appear on the list of sanctioned entities published by the US Office of Foreign Assets Control (OFAC).

The bank refused to honour the LCs, later saying in court that because of the Omnia’s suspect ownership, the ship was captured by the sanctions clause in the LCs which included vessels “subject to any applicable restriction”.

After being notified of Kuvera’s lawsuit, the bank sent information about the transaction to OFAC, which provided a statement for the bank saying in part that “had [JP Morgan] and its Singapore branch not rejected the trade documents for a non-US person’s sale of cargo shipped via a Syrian vessel, it would have resulted in an apparent violation of OFAC regulations”.

A JP Morgan employee gave evidence in the 2022 trial that the bank decided it was preferable to be sued by Kuvera for not paying out under the LCs than to face enforcement action by OFAC.

But appeals court judge Steven Chong, writing on behalf of the panel of three judges, found: “While [the payment refusal] might have been ‘rational’ from a risk management perspective, we disagree that it was “contractually justified’. There are several difficulties inherent in such an approach independent of the fact that it is not permitted by the text of the sanctions clause.”

Under OFAC sanctions regulations, any entity at least 50% owned by a sanctioned entity is also considered subject to sanctions. According to the judgement, JP Morgan admitted that a vessel did not need to fall under the 50% rule to be added to its internal “master list”, but could be added if there was a sanctions “nexus”

The judges found that JP Morgan’s approach to determining whether the transaction was likely to provoke the ire of OFAC was “unsatisfactory and unfair” and “entirely a reflection of risk management considerations”.

JP Morgan first added the Omnia to its internal blacklist in 2015, when it sailed under a different name and was owned by Syria’s Ali Samin Group. In 2019 the bank was notified of the name change and renewed its due diligence on the ship, finding that it was now owned by a Barbados shell company.

But the lender’s research suggested “possible ownership” by an Ali Samin entity, and that the ship was managed by a UAE entity also owned by the Syrian group. As such, JP Morgan told OFAC it “made a risk-based decision to retain the vessel on its internal filter as a Syrian-owned vessel”.

OFAC has previously published guidance which highlighted the use of shell companies “to disguise the ultimate beneficial owner of cargo or commodities in order to avoid sanctions or other enforcement action”.

But the judges found that JP Morgan could not rely on the existence of red flags, or the involvement of “third parties” such as OFAC, to determine the vessel’s ownership and to refuse to pay Kuvera. “In our view, it is not sufficient to suggest that just because information on her beneficial owner is not available, it must follow that there is some masking or concealment as regards the identity of her beneficial ownership,” Chong wrote.

“In light of the ‘inconclusive’ evidence before the court, we do not think that JPMorgan’s decision based on its own risk-taking calculus to refuse payment to Kuvera was sufficient to establish that the Omnia was subject to ‘any applicable restriction’ under the sanctions clause. As such, JPMorgan was not entitled to invoke the sanctions clause to deny payment to Kuvera upon a complying presentation of documents.”

‘Between a rock and a hard place’

Cases involving banks refusing to honour LCs because they fear punishment by sanctions regulators are tipped to become more common after Russia’s invasion of Ukraine prompted thousands of fresh entities to be sanctioned by a global coalition of governments.

One of the only other cases to make it through court so far also went against a lender, when a London judge ruled in March that UniCredit should have made payment to aircraft leasing companies under LCs issued by Russia’s sanctioned Sberbank.

The Singapore case “highlights how banks may be caught between a rock and a hard place in the discharge of their duties – to the regulators, and to the businesses they serve”, says documentary credit expert Tat Yeen Yap. “Banks are conscripts to perform policing for political masters not necessarily of their choosing.”

But Yap, Asia Pacific managing director at fraud mitigation specialist MonetaGo, believes the judgement won’t have a negative impact on the appetite of banks to confirm LCs “because banks have always been aware of the regulatory risks involved in financing international trade”.

He tells GTR: “This case may spur banks to pay more attention to the sanctions clauses they add to their undertakings, and discourage the non-use of sanctions clauses in LCs and confirmations.”

Arvin Lee, partner at Singapore law firm Wee Swee Teow LLP, says that although the judges made clear their findings were not intended to apply to sanctions clauses generally, they “adopted a high evidentiary threshold” which would “certainly be welcome by [LC] beneficiaries in the trade finance market for enhancing certainty of payment”.

Pointing to the judges’ tentative conclusion that there may be “incompatibility” between sanctions clauses and letters of credit, Lee tells GTR the court “was cognisant of the fact that beneficiaries are typically not involved in nomination of the vessels and the beneficial ownership of the vessel might not be apparent from publicly available records”.

In a statement to GTR, Kuvera says: “There should not be an imbalance between mighty banks and less mighty merchants. Kuvera pursued the matter to obtain clarity not only for itself but also for the wider business community. We are grateful that we managed to clear the kinks and the successful appeal is a testimony to our belief that there has to be a level playing field, especially in the area of commerce.”

Mahmood Gaznavi, who represented Kuvera, describes the case as “an interesting brief from a determined client who wished to get the right answers from day one”.

“Kuvera had struggled to understand why it had been denied its dues under the letters of credit through no fault on its part. Despite vigorous efforts, Kuvera was kept in the dark. Any light that was provided came upon the matter escalating to court.”

Kuvera received the bulk of the US$2.4mn direct from the buyer shortly after JP Morgan declined to confirm the LCs, and pursued damages of US$218,068. The Court of Appeal ultimately granted it US$110,215.

Spokespeople for JP Morgan did not respond to questions about the case.

The post Coal trader wins appeal in trade sanctions clash with JP Morgan appeared first on Global Trade Review (GTR).

The Hai Long project is expected to be one of the largest offshore wind farms in Asia once operational, slated for 2026, and will generate enough clean energy to power more than a million Taiwanese households.

The project, which is backed by Canadian power company Northland Power and Japanese conglomerate Mitsui, is part of the Taiwanese government’s wider push to reach net-zero greenhouse gas emissions by 2050.

The NT$117bn facility is being co-financed by a cluster of commercial financial institutions, alongside the Japan Bank for International Cooperation (JBIC) and the Korea Development Bank.

ANZ, Crédit Agricole CIB, CTBC Bank, DBS, Deutsche Bank, Fubon Insurance, HSBC, Mizuho Bank, SBI Shinsei Bank, SMBC, Standard Chartered, Taipei Fubon Commercial Bank and Taiwan Life Insurance are all participating lenders.

Financing is being covered by insurance or guarantees from several Asian, North American and European ECAs, including Credendo, Export Development Canada, Export Finance Australia, Export Finance Norway, JBIC, Nippon Export and Investment Insurance, and UK Export Finance (UKEF).

Clifford Chance, one of the law firms advising the ECAs and lenders on the deal, says the transaction amounts to the largest ever non-recourse offshore wind project financing in the Asia region.

“Clean energy projects like Hai Long are a priority for UK Export Finance as we engage with global efforts to reach net zero. With the recent OECD Arrangement modernisation increasing the range of support which we can offer for climate-friendly projects, we can expect to see and support more multi-agency transactions like this in the future that will benefit British businesses,” says Tim Reid, UKEF’s CEO.

There has been a string of offshore wind financings in Taiwan in recent years, with the Formosa 2 and Yunlin projects having agreed multi-billion dollar deals in 2019. A year later, Copenhagen Infrastructure Partners closed a US$3bn ECA-backed project financing deal to construct the Changfang and Xidao wind farm.

Law firm Linklaters, who advised the corporates involved in the Hai Long project financing, says Gentari International Renewables will acquire 49% of Northland Power’s ownership interest shortly after financial close.

The post Hai Long scores bumper US$3.6bn ECA-backed facility appeared first on Global Trade Review (GTR).

Winson Oil had sued Standard Chartered and OCBC for non-payment under two letters of credit (LCs) totalling over US$60mn. The banks refused to pay on the basis of suspected fraud, arguing that it later emerged the cargo had already been sold to other buyers and that documents underpinning the trades had been forged. 

Although documents were not falsified by Winson, but by disgraced trading house Hin Leong, the court ruled on August 18 that Winson did not have belief that the transactions were legitimate, and so was acting fraudulently when it sought payment from the two lenders. 

The ruling has been hailed by experts for clarifying whether a reckless trader is acting fraudulently, particularly in the wake of a controversial ruling last year involving PPT Energy, Crédit Agricole and collapsed trader ZenRock. 

“This is a significant victory for the banks,” says a source involved in the Winson dispute, speaking on condition of anonymity. “PPT was the case that caused some concern.” 

In the PPT case, Crédit Agricole provided an LC for a US$24mn sale of oil to ZenRock. The transaction was part of an elaborate circular trade and money-making scheme by ZenRock, which involved producing forged documents such as sales contracts. 

The bank argued that it should not have to pay out on the LC, on the grounds PPT recklessly presented documents with indifference as to whether they were valid or not.  

However, the court disagreed, with the judge ruling that the trader’s recklessness “does not give grounds to restrain payment under a letter of credit and PPT did not act fraudulently”. 

The source says: “The trouble with that case was ‘recklessness’ could be interpreted differently. If you took the judge’s statement in that case, perhaps out of context, it could cast some doubt over whether being indifferent to the truth is sufficient for the fraud exception.  

“What this case clarifies now is that if you’re indifferent to the truth, how can you say that you actually believed in the truth of the statement?” 

The PPT ruling sparked concern within the industry, says Baldev Bhinder, managing director of Singapore law firm Blackstone & Gold. 

Crédit Agricole had alleged that PPT presented an invoice and letter of indemnity (LOI) claiming it was involved in a genuine trade transaction with ZenRock, but the court found the trader’s indifference to whether that was true was not enough to constitute fraud. 

“That significantly reduces the value of the LOI,” Bhinder tells GTR. “It might then be said to only reward traders who promise banks in their LOIs that they have good title and are entitled to original bills of lading without doing very much to check if that is indeed the case. 

“Then, you’re effectively rewarding traders that put their heads in the sand when the flags are red, and shifting the risk of detection onto banks, whereas the traders are actually best placed to understand how legitimate a transaction is.” 

The Winson judgement, Bhinder says, “puts everything back into context”. 

“It means if a trader is recklessly indifferent to the truth of a transaction, then it runs the risk that it is not legitimate, and if that’s the case it doesn’t get paid,” he says. “In my view, this case correctly balances that allocation of risk between the beneficiary of an LC and the bank.” 

Factual differences 

The source close to the case says that despite its significance, the judgement should not be viewed as contradicting the PPT ruling. 

“The judge found there are factual differences between the two cases,” they note. “With PPT, the argument around indifference to the truth had to do with the fraud perpetrated by ZenRock, and as far as PPT was concerned, there was no obligation to dig deeper and find out whether there was any wrongdoing between ZenRock and the banks.” 

In Winson’s case, however, the court found the trader did not behave as expected when alerted by OCBC to the possibility of fraud. 

“The moment OCBC rejected one of the documents, there were no real checks done and no real inquiries made; Winson Oil just set about producing another set of documents to present to another bank,” the source says. 

Winson also claimed Trafigura – the party responsible for initially purchasing the goods from Hin Leong before selling them onto Winson – made false representations in the LOI it provided to Winson. However, the same representations, relating to the same cargo, were also included in Winson’s own LOIs, they say. 

In addition, the court ruled that the circular transaction structure, which would be completed once Winson sold the cargo back to Hin Leong, was pre-arranged. 

“That meant Winson’s argument – that it found itself in difficulty as the market was failing, but luckily was able to sell to Hin Leong – was thrown out by the court,” the source adds. 

A second source close to the case, also speaking on condition of anonymity, points out that the case “does not lower the bar for the fraud exemption”. 

“Fraud is as difficult to prove as ever, and proving fraud always comes down to the facts,” they say. “It is not so much the law that changes things, but your litigation strategy, and how you collect and present your evidence.” 

OCBC and Standard Chartered declined to comment when contacted by GTR. Winson Oil did not respond when contacted. 

The post Winson fraud judgement a “significant victory” for banks appeared first on Global Trade Review (GTR).

Essar Steel Middle East entered into a US$25mn term loan arrangement with the bank’s UK branch in early 2013 and separately took out a standby letter of credit (LC) from India Exim for an amount equivalent to the commitment.

Under the deal, the standby LC was to act as security for the original facility and was to be issued by the lender’s Mumbai office.

But according to court documents, the UAE-based company failed to make its first payments for the facility in 2016 and then ignored requests for repayment under the standby LC when those became due the following year.

In a letter sent in July 2017, India Exim demanded Essar Steel India (ESIL), the main subsidiary of the company and which acted as guarantor on the standby LC, cover the costs which by that point had risen to over US$26mn.

But ESIL failed to pay immediately and was itself caught up in another court case around that time, after the National Company Law Tribunal in India initiated insolvency proceedings against the embattled steelmaker.

The case comes roughly four years after Luxembourg-based company ArcelorMittal acquired ESIL in a deal worth over US$7bn and subsequently created a joint venture with Japanese company Nippon Steel to own and operate the new company, AM/NS India.

Essar Steel was a key industrial asset within the wider Essar Group, a conglomerate owned by brothers Shashi and Ravi Ruia, which also held assets in several other sectors including power, oil refining and telecoms.

ESIL owned iron ore plants and a steel factory in Hazira, as well as processing facilities in India, while the wider Essar Steel company also operated a subsidiary in Indonesia and ran a distribution chain for steel products across Asia and the Middle East.

But the Ruia family was forced to sell the steelmaking unit following the introduction of a strict new bankruptcy system in India in 2017, which led to the establishment of the National Company Law Tribunal. Not long after being created, the legal body took swift action against a dozen industrial Indian companies – including ESIL – for defaulting on loans from state-owned institutions such as the State Bank of India.

India Exim ultimately clawed back a portion of the unpaid money in 2019, court filings show, but the financial institution says it is still seeking US$0.8mn for the term loan facility and nearly US$13.5mn under the standby LC agreement.

India Exim has brought the case against the Dubai-incorporated ArcelorMittal Nippon Steel Middle East. AM/NS did not respond to a request for comment.

The post India Exim files suit against UAE steel company appeared first on Global Trade Review (GTR).

The transaction represents one tranche of a US$50mn facility. The other US$25mn tranche is exclusively an Islamic finance facility.

It is the first short-term trade transaction that is both shariah-compliant and aligned with the Green Loan Principles and the guidelines of Bank Negara Malaysia, the country’s central bank, for both MUFG and Sime Darby Motors, the lender says.

The facility will be used to provide working capital needed for the production of electric vehicles as well as support other green requirements.

“This is a reflection of our commitment to engaging in sustainable partnerships, in driving sustainable innovation and technology,” says Andrew Basham, Sime Darby Motors’ managing director.

Colin Chen, MUFG’s head of ESG finance for Asia Pacific, says the bank is committed to creating “a just and equitable transition across Asia”. “This transaction’s unique structure further aligns Sime Darby Motor’s financing programme with their goal of greening their vehicle portfolio,” Chen says.

Goh Kiat Seng, head of global corporate banking for MUFG in Malaysia, adds that the lender is “honoured for the opportunity to demonstrate our long-term banking commitment and partnership with the Sime Darby Group, especially Sime Darby Motors, which has embarked on a fast-growing green vehicle journey for Malaysia”.

MUFG says it is aiming to invest a cumulative total of ¥35tn (US$239bn) in sustainable finance globally by 2030, and achieved just over 70% of this target between 2019 and 2022.

It became the first Japanese bank to offer Islamic banking products and services after establishing an Islamic banking arm in Malaysia in 2008.

At the start of the year, MUFG closed its first sustainable trade finance facility in India to help Tata Power develop two solar power projects, which are expected to generate a combined 220 megawatts of renewable energy for the country.

The post Sime Darby, MUFG close first Islamic green trade finance facility appeared first on Global Trade Review (GTR).

The company will offer a range of trade finance products to Indian exporters, with a primary focus on export factoring. The inauguration of India Exim Finserve took place at an event in Gujarat in early August.

The new business will involve India Exim purchasing invoices from overseas buyers of Indian exports, therefore facilitating quicker payment to local companies while absorbing the risk of non-payment by the overseas suppliers.

This is anticipated to give Indian exporters confidence to “explore new markets,” and will be particularly beneficial for micro, small and medium-sized businesses, who can rely on the quality of their accounts receivable rather than collateral, as would ordinarily be the case with a loan, India Exim says.

India Exim Finserve will also cater to other areas of trade finance such as forfaiting, supply chain finance, import factoring and import financing.

“Exim Bank is now covering the entire canvas of trade with bank-intermediated trade finance along with open account trade,” says Harsha Bangari, the bank’s managing director.

The move aligns with broader efforts at India Exim to grow the bank’s short-term trade finance portfolio. In 2022 the bank launched a trade assistance programme (TAP) to coax exporters into new geographies by providing domestic lenders with partial or full guarantees to mitigate payment risks.

While the factoring business is expected to focus on exports into developed economies, such as Europe and North America, TAP is aimed at building trust between the Indian banking system and lenders in developing or untapped markets, such as in Africa and South America and within Asia.

In Africa, the bank has already struck TAP agreements with lenders in several countries, including Côte d’Ivoire, Liberia, Mauritania, Tanzania, Uganda, Ethiopia, Egypt and Rwanda, India Exim’s deputy managing director, N Ramesh, tells GTR, while the bank has also facilitated transactions in South American countries including Argentina and Ecuador.

“Wherever certain transactions are not happening because of unfamiliarity, because of insufficient limits between countries – or between the banks – we are trying to offer support,” Ramesh says.

“Many more [African] countries are in the pipeline,” he adds.

As of March 31, India Exim’s TAP scheme supported over 120 transactions and backed exports worth a total of US$305mn to 17 countries, through credit lines and refinance facilities. The bank intends to “multiply its exposure” in the coming years, Ramesh tells GTR.

The launch of the India Exim Finserve subsidiary follows a broader push by the Indian government to stimulate the domestic factoring industry, amid concerns regulatory hurdles had been constraining the sector.

According to the Reserve Bank of India, recent regulatory changes under the 2011 Factoring Regulation Act are set to expand the scope of non-bank financial companies eligible to engage in factoring from seven to 182.

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