SocGen shut its Singapore commodity desk after lending US$240M to Hin Leong

Société Générale closed its trade commodity finance unit in Singapore after the collapse of oil trader Hin Leong Trading prompted the bank to halt fresh funding to such firms in the region. All front-office staff dealing with transactions were dismissed, though some administrative workers stayed. Large Asian commodity trading clients with Singapore operations moved under Hong Kong's coverage, and SocGen cut ties with Singapore-based small and medium commodity trading firms.

Earlier that year, SocGen was among more than 20 Singapore and international banks owed US$3.8 billion by Hin Leong, which filed for creditor protection after crude prices crashed. The French bank was owed US$240 million and later froze new allocations to oil traders in Asia-Pacific. Its surprise first-quarter loss included €342 million set aside by the investment banking unit for risky assets, in part related to two fraud-related charges SocGen did not identify.

The retreat came amid a wider shake-out: Natixis merged its infrastructure and commodities operations, banks were already pulling back from Asian commodities after losses at Chinese and Japanese traders and the downfall of Noble Group, and HSBC — Hin Leong's biggest creditor — booked substantial provisions against US$2 billion of oil-trader exposure in the first quarter, with ABN Amro the second-largest creditor.

A single client failure — US$240 million of Hin Leong paper — was enough to end SocGen's entire Singapore trade-finance franchise.

The bank's Q1 provisions (€342M) included two fraud-related charges, showing the exposure was not a one-off credit miss.

Exiting wholesale hands the remaining market — and the lesson's cost — to rivals like HSBC who stayed.

Trade finance is the lifeblood of commodity trading; a lender that freezes also severs the information flow that would price its next risk.

Concentration kills quietly in trade finance. When one borrower's failure can sink a desk's economics, the fix is exposure limits by client and country — not a retreat that cedes the market to rivals.

SocGen said in a 31 July 2020 statement that natural resources financing 'is and will remain' a core expertise including in Asia, while confirming the set-up change. The Singapore unit's front office was dismissed, Asian coverage shifted to Hong Kong, and SME commodity clients were cut. The bank warned it might provision more over the remainder of the year.