STANDARD Bank Group Ltd., Africa’s biggest lender by assets, may make further writedowns of about $80 million on the value of aluminum stockpiles entangled in a Chinese fraud investigation, two fund managers said.photo by Simphiwe Mbokazi 90 STANDARD Bank Group Ltd., Africa’s biggest lender by assets, may make further writedowns of about $80 million on the value of aluminum stockpiles entangled in a Chinese fraud investigation, two fund managers said.photo by Simphiwe Mbokazi 90
Johannesburg - Standard Bank Group might make further writedowns of about $80 million (R927m) on the value of aluminium stockpiles entangled in a Chinese fraud investigation, two fund managers said.
Standard Bank, which isn’t accused of wrongdoing, started legal proceedings in July after $167m of aluminium it claimed ownership of was placed under lockdown by authorities probing irregularities at warehouses in Shandong Province.
The aluminium stockpiles held in bonded facilities, mostly at the Qingdao port, were allegedly pledged to banks as collateral for loans multiple times. The lender had written down the value of the metal by about half and said last month that any recovery was uncertain.
Standard Bank in December revised the value of its global markets business, which includes the aluminium assets, being sold to biggest shareholder Industrial & Commercial Bank of China. Standard Chartered, ABN Amro Group and Citigroup also made loans affected by the alleged fraud.
Standard Bank said in a statement that any financial impact from the stockpiles would be accounted for in its year-end results due in March.
“I expect Standard Bank will have to write off the other 50 percent of its exposure to aluminium stockpiles in China in its full-year results,” Jean Pierre Verster at 36ONE Asset Management, which holds the stock, said on January 8.
On Standard Bank’s balance sheet, the Shandong metal stocks’ net value was $167m as of June 30, with $80m of that provided for, or written down, a January 13 statement shows. In addition to legal action to protect its position, the bank had also made an insurance claim, it said.
The investigation at Qingdao, China’s third-largest port, is examining companies owned by metals trader Chen Jihong. Chinese authorities have uncovered almost $10 billion in fraudulent trade.
Standard Bank has climbed 12 percent in the past year, compared with the average 28 percent gain of the banks index. It rose 0.92 percent to close at R142.04 yesterday.
Bloomberg