| Rising costs and delays in issuing letters of credit driving SMEs out of the market but global and local banks are still active in the business. The cost for financing commodity imports has increased steeply in China as banks begin to raise margin levels and step up due diligence investigation on clients after the Qingdao fraud that saw 25 international and local lenders lose up to $4.5 billion when traders reused copper collateral multiple times.
Commodity financing is a common way for small and medium-sized China firms to raise funds as state-owned enterprises are given preferential access to loans. But in June this year it was revealed that Decheng Mining, a Qingdao-based metals trading firm, was using the same batch of copper and aluminium stored at the local port as collateral against multiple bank loans...............................................Full Article: Source
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