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UPDATE 2-Hit by commodity defaults, banks in Singapore team up for digital trade registry

Tue, 6th Oct 2020 03:09

(Recasts, adds comments, names of banks)

By Anshuman Daga

SINGAPORE, Oct 6 (Reuters) - Some of the world's biggest
banks in commodity trade financing are creating a digital trade
finance registry in Singapore to try and mitigate the risk of
trade fraud and boost transparency after losing billions of
dollars due to a spate of defaults.

Banks have reduced their commodities business this year to
cut risk following collapses, including that of Singapore's Hin
Leong Trading (Pte) Ltd, which shocked lenders after instances
of financial trouble were laid bare by the coronavirus crisis.

In a joint statement issued on Tuesday, DBS Group
and Standard Chartered said they are leading a group of
12 other banks in Singapore to create and conduct a central
database to access trade transactions financed across banks.

"A digital trade registry strengthens trade financing banks'
ability to avoid duplicate financing, and facilitates more
sustained credit flow in trade financing," said Ho Hern Shin, an
assistant managing director at the Monetary Authority of
Singapore.

Reuters first reported in July that banks are teaming up to
strengthen lending practices and improve transparency in the
sector.

The registry's proof of concept is supported by Enterprise
Singapore (ESG), a government agency that promotes trade, and
endorsed by the main representative body of banks.

"This mitigates against duplicate financing from different
bank lenders for the same trade inventory, leading to greater
trust and confidence among banks and traders alike," according
to the statement.

Developed on a blockchain network supported by technology
provider dltledgers, DBS and StanChart developed the proof of
concept in three months with banks including ABN AMRO,
ANZ, Deutsche Bank, OCBC and
Rabobank.

"The final form of such a trade finance registry should
likely be subjected to some form of final selection and
assessment by the relevant government authorities," said one
banker who declined to be named as he was not authorised to
speak to the media.
(Reporting by Anshuman Daga; Additional reporting by Jessica
Jaganathan; Editing by Simon Cameron-Moore)

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