ICBC is the latest state-owned bank to rein in on commodity risks, temporarily stopping retail investors from opening new positions in products linked to the asset class.
ICBC made the announcement to suspend the opening of new positions in products linked to crude oil, natural gas and soybeans from retail investors, effective as of today. The decision was due to recent turbulence experienced by commodity markets, the statement added.
ICBC’s move follows the collapse of an oil-linked product at fellow state-owned lender Bank of China which reportedly led to around $1 billion of losses. This has since caused an uproar and investors are allegedly taking their qualms online to demand the bank to shoulder some of the losses.
Despite the worries, official figures indicate limited levels of risk in the broader banking system linked to commodities. Currently, there is about 1.88 billion yuan ($265 million) of outstanding investment vehicles linked to commodities – less than 0.01 percent of China’s overall wealth product market.
