SocGen's Asia-Pac trade finance heads exit

Societe Generale's regional heads of trade and commodities finance for the Asia-Pacific have left the Paris-based bank, raising concerns among Singapore-based shipping fuel traders that it may wind back financing services to the sector.

France's third-biggest listed lender said this year that it would shrink or exit some businesses to cut costs at its investment banking unit, and has been hit by losses from trade financing in the Singapore bunker fuel market.

Societe Generale, or SocGen, confirmed on Thursday that Mr Damien de Rosny and Mr Timothy Siow had left the bank, without providing further details.

Mr de Rosny declined to comment when contacted by Reuters, citing a confidentiality agreement. Mr Siow could not be reached for comment.

The bank, however, said it remains active in natural-resources financing, one of its core areas of expertise.

"Societe Generale remains committed to trade commodities finance at the global level and in Asia," the bank said in an e-mail to Reuters.

A SocGen source in France acknowledged that as the firm cuts back on commodities trading, it is also becoming more selective about counterparties in commodities trade finance.

The bank's reshuffle had sparked concern that it could scale back, or even wind down, its financing services to Singapore's shipping fuel sector, five trade sources said.

Commodities trading relies heavily on credit lines provided by banks and Societe General has been a significant player in the sector, said the sources, who declined to be identified, citing company policy.

"Banks are certainly a lot more vigilant in the marine fuels sector at this time, and are asking themselves more questions as to the support they should be providing in the light of a number of hits different banks have taken," said a risk management executive at a Singapore oil trader.

Singapore-based marine fuels supplier Inter-Pacific Petroleum (IPP) this year lost its operating licence and was placed under judicial management amid mounting financial stress.

Of IPP's more than US$168.5 million (S$230 million) in outstanding liabilities, over US$96 million was in trade financing from SocGen, court documents reviewed by Reuters showed. The bank did not confirm the losses.

In 2017, SocGen also incurred losses after one of Singapore's largest ship fuel traders, Universal Energy, was stripped of its operating licence because of operational malpractice.

Singapore is the world's largest bunkering hub, supplying nearly 50 million tonnes of marine fuels last year, worth over US$20 billion in revenues.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 23, 2019, with the headline 'SocGen's Asia-Pac trade finance heads exit'. Print Edition | Subscribe