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After Fraud and Negative Oil Banks Rethink Billions in Loans (1)

May 5, 2020, 3:13 PM

For decades, the international flow of key commodities ranging from oil to grains has been lubricated by hundreds of billions of dollars in short-term financing from the world’s biggest banks.

Collateral for the bulk of these loans, known as secured commodity trade finance, has been the raw materials themselves. Most banks considered them low-risk loans because if there was a problem they could simply sell the oil, metal or grain to recover their money.

But a combination of fraud scandals in a key trading hub in Asia, negative oil prices and an historic slump in crude demand due to the ...