ABN Amro latest to make claim against Hin Leong

Dutch lender is second bank to file charges linked to Singapore oil trading giant

Pipelines running along the deck of Singapore oil trader Hin Leong's Pu Tuo San VLCC (very large crude carrier), when the supertanker was in the waters off Jurong Island last year. The company, founded in 1963, owes some US$3.85 billion (S$5.5 billio
Bankers increasingly reluctant to give commodity traders in Asia the credit they need to survive after anxiety has reached new heights in recent days as fabled Singapore oil trader Hin Leong Trading struggles to repay debts said to amount to $5.5 billion.PHOTO: REUTERS

ABN Amro Bank 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, according to filings with Singapore's Accounting and Corporate Regulatory Authority.

The Amsterdam-based lender is the second bank to file charges linked to Hin Leong, which owes some US$3.85 billion (S$5.5 billion) to more than 20 Singapore and international banks, including HSBC Holdings, DBS Group Holdings and Standard Chartered.

Transport Minister Khaw Boon Wan yesterday noted that Hin Leong's bunkering service arm, Ocean Bunkering Services, is a major player in Singapore's bunkering sector. "While there is some immediate collateral impact through credit tightening on other bunkering players, it is manageable," he wrote in a Facebook post. "Our priority is to ensure that our bunkering sector remains robust. And it is. Other existing bunker suppliers have immediately come in to fill the gap."

Yesterday, the Maritime and Port Authority of Singapore (MPA) awarded two new bunker supplier licences to Minerva Bunkering and TFG Marine, following its call for applications for new licences in December last year.

Minerva Bunkering and TFG Marine are related entities by shareholding to Mercuria Group and Trafigura respectively, two of the world's largest independent energy trading companies with a significant presence in Singapore.

The two new players will increase the supply of marine fuel that is compliant with the International Maritime Organisation 2020 sulphur regulations in the Singapore bunker market, said the MPA and Enterprise Singapore in a joint statement.

They bring the total number of MPA-licensed bunker suppliers to 45 at the port of Singapore.

Bunkering services here and oil trading remain resilient despite the Covid-19 pandemic. Bunker sales here grew 5.4 per cent, from 12.07 million tonnes in the first quarter of last year to 12.72 million tonnes in the first quarter of this year.

Hin Leong, founded in 1963 by Chinese tycoon Lim Oon Kuin, filed the application for a debt moratorium from Singapore's High Court last Friday, according to people with knowledge of the matter.

London-based HSBC has the most exposure to the oil trader, with about US$600 million, people familiar with the situation said.

ABN Amro did not specify the amount owed to the bank in the documents dated April 17. The charges covered include Hin Leong's bills of lading, air waybills, cargo and warehouse receipts, as well as the goods shipped that were related to the bank's credit.

An irrevocable letter of credit cannot be cancelled or amended by the issuing bank without the agreement of the parties in the credit transaction. Letters of credit are a critical financial lifeline for commodity traders, used as a way of financing short-term trade.

A bank issues the so-called L/C on behalf of the buyer as a guarantee of payment to the seller. Once the goods have changed hands, the buyer repays the lender.

Societe Generale last week registered several charges covering goods and receivables financed by the bank and the Hin Leong bank account with the Paris-based bank. The latest development comes as oil extended its slide yesterday.

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• Additional reporting by The Straits Times

A version of this article appeared in the print edition of The Straits Times on April 21, 2020, with the headline 'ABN Amro latest to make claim against Hin Leong'. Subscribe