* Singapore traders say offered credit by BOCI, ICBC
* Some Western rivals shifting focus to larger commodity
* Chinese banks have been pushing to expand overseas
By Melanie Burton
MELBOURNE, Oct 12 Chinese banks are stepping up
lending to midsize metals traders in Singapore, pushing into a
gap in the market as U.S. regulations and fading appetite for
risk drive Western rivals to focus on larger commodity
merchants, metals industry sources said.
The move adds to a broader push by Chinese banks overseas
and comes as markets for metals such as zinc and aluminium show
signs of revival after half-a-decade in the doldrums.
It is also likely to help efforts by the world's No. 2
economy to boost its influence in the region's supply chain,
with Singapore a major hub for trade in base metals, used in
everything from batteries to construction.
Three executives at medium-sized metals trading companies in
Singapore told Reuters they had in the past few months been
approached by Bank of China International (BOCI), a unit of Bank
of China, with two of those securing new credit
Those two borrowers said they had also been approached by
the Singapore corporate unit of Industrial and Commercial Bank
of China (ICBC) . None of the executives
wanted to be identified due to the sensitivity of the issue.
ICBC said it was unable to make immediate comment. BOCI
would not comment, although it told Reuters in June that it was
broadly looking to expand its financing business for commodity
"Before they wanted to support the Chinese firms in
Singapore, but now they are extending to the offshore trading
houses, even ones with no domestic market access," said the
executive that had not taken a loan.
There are around 20-30 midsize metals traders in Singapore
such as UIL Singapore and Raffemet. They are mostly backed by
Swiss, Chinese, Japanese or Indian firms.
The expansion in Chinese lending comes as many Western banks
have been hit by regulations such as the Dodd-Frank financial
laws in the United States that have raised their capital holding
requirements, pushing them to pare back on lending to all but
their largest clients in the capital-intensive industry.
"(BOCI) have offered me a credit limit. It's an extremely
competitive rate," said one of the executives in Singapore.
He said the bank was offering a flexible credit line at
1-1.5 percent per year on top of the London Interbank Offered
Rate (Libor), which is often used as a benchmark interest rate
in loans. Three-month Libor this week stood at around 0.88
That compares with wider bank lending rates to the industry
of 2.5-3.5 percent over Libor, the executive said.
But the executive who had not taken out a credit line warned
that Chinese lenders would not simply hoover up clients, as
their lack of experience in the sector compared to "first class"
Western banks meant their client-base would initially be limited
to those struggling for other options.
"You have a risk that (Chinese banks) don't understand
something and that could result in a delay in payment, mucking
up your cashflow," he said.
"They will not necessarily take market share just like
(Reporting by Melanie Burton; Additional reporting by Vidya
Ranganthan in Singapore and Engen Tham in Shanghai. Editing by