ING Is Said to Suspend Trade Finance for Wheat Cargoes to Egypt

LAGOS (Capital Markets in Africa) – ING Groep NV, one of the world’s largest banks financing the global commodities trade, has suspended lending for wheat shipments to top importer Egypt, according to people familiar with the matter.

The Dutch lender has stopped backing deals for cargoes sold to Egypt’s state buyer General Authority for Supply Commodities, said the people, who asked not to be identified because the information is private. The move comes as Egypt has slowed processing of deals and as the bank gets hit by payment disputes involving cargoes sold by AOS Trading DMCC to GASC.

The decision may reduce the numbers of offers in tenders to Egypt, which relies on imported grain for its state-subsidized bread program that helps feed almost 100 million people. In the past two years, ING financed about half of the wheat Egypt bought from Russia, the world’s top exporter and the biggest supplier to GASC, the people said.

ING said it doesn’t comment on individual clients or potential clients.

Egypt has slowed down processing of deals in the past three years, with payments for cargoes taking two to four months after delivery documents are presented instead of the normal business practice of up to five days, the people said. GASC is also holding back performance bonds — money put up as a guarantee for the state buyer in case suppliers don’t fulfill their contracts — for longer than usual, they said.

ING is also taking a hit after three of the wheat cargoes it financed for AOS weren’t delivered to Egypt by the Dubai-based trader, the people said.

Some of ING’s clients selling Russian wheat to Egypt include Aston, Solaris Commodities, Alegrow and Orsett, they said.

Source: Bloomberg Business News