ICICI Bank hit by exposure to oil trader

India’s largest private sector lender ICICI Bank share price plunged for second day in a row after reports suggested the bank has exposure to Ocean Tankers, a unit of Singapore oil-trading firm Hin Leong Trading (HLT), that has filed for bankruptcy in Singapore.

The firm owes nearly $100 million — or nearly Rs 760 crore — to the lender.
The Mumbai based bank has lent $100 million to the company, out of which $75 million is secured through inventory.

Hin Leong and its sister company Ocean Tankers, which owns more than 100 cargo ships, have both filed for bankrutpcy on Friday which will give 30 days to restructure debt.

Hin Leong founded by Chinese billionaire Lim Oon Kuin has total debt of close to $4 billion which will have to bw restructured.

While ICICI Bank is one of the 23 secured creditors which have lent $3.64 billion to the company, it is one of the only four lender that have secured a part of their exposure to the company.

The founder and director of Hin Leong Trading Pte (HLT), Asia’s largest oil trader, directed the firm not to disclose these losses.

Meanwhile, ICICI Bank is seeking the impounding of two vessels operated by Ocean Tankers (Pte).

HLT, one of Asia’s largest oil traders, has reported net profit of $78.2 million for the business year ended in October.

The recent collapse in the oil price and the coronavirus pandemic, has hammered oil demand and pushed up costs for the oil trading firm. It’s not earning profits over the last few years.

Though the crude oil price recovered Tuesday, but benchmark crude futures have lost substantially in the past few months, especially after the Coronavirus outbreak.

Oil prices have skidded as travel restrictions and lockdowns to contain the spread of the coronavirus curbed global fuel use, with demand down 30% worldwide.

That has resulted in growing crude stockpiles with storage space becoming harder to find.

On Monday, US crude oil futures had collapsed below $0 for the first time in history, amid a coronavirus-induced supply glut, ending the day at a stunning minus $37.63 a barrel as desperate traders paid to get rid of oil.

Brent crude, the international benchmark, also slumped, but that contract was nowhere near as weak because more storage is available worldwide

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