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ICBC Recovered Watchlisted $500 Million Vedanta Loan in 2017
A company connected to Vedanta borrowed $500 million from a group of banks.
ICBC was responsible for about $65 million of that loan.
In 2016, ICBC became worried because commodity prices were falling and Vedanta had received lower credit ratings.
The bank also questioned how much of Vedanta’s cash was actually available to repay debts.
It had additional questions because Welter Trading did not provide all the information needed for compliance checks.
ICBC put the loan on an internal watchlist, which was a warning for closer monitoring.
The loan was not described as a default.
Welter Trading repaid the exposure completely in 2017, and ICBC did not report a credit loss.
Vedanta said the facility had been repaid and that any ICBC involvement may have resulted from a later loan transfer.
Industrial and Commercial Bank of China joined a $500 million syndicated loan to Vedanta subsidiary Welter Trading in 2014.
ICBC’s approximately $65 million exposure was divided among its London, Singapore and Mumbai offices.
The loan was placed on ICBC’s internal watchlist in 2016 amid falling commodity prices, ratings downgrades and covenant concerns.
Internal records also raised concerns about Vedanta’s access to group cash and Welter Trading’s incomplete compliance information.
The exposure was repaid in full in 2017, and ICBC recorded no credit loss.
- Who
- Industrial and Commercial Bank of China, Vedanta Resources, and its subsidiary Welter Trading Ltd.
- What
- ICBC placed its exposure to a $500 million syndicated loan on an internal watchlist before recovering it in full.
- Where
- The borrower was incorporated in Cyprus; ICBC’s exposure was held through offices in London, Singapore and Mumbai.
- When
- The loan was arranged in 2013, ICBC joined in 2014, watchlisted the exposure in 2016, and recovered it in 2017.
- Why
- Falling commodity prices, multiple ratings downgrades, refinancing pressure, covenant waivers, concerns about access to group cash and incomplete compliance information prompted scrutiny.
Bank Records and Risk Concerns
Vedanta’s Response
Reason for the watchlist
Bank Records and Risk Concerns
ICBC records cited falling commodity prices, successive ratings downgrades, refinancing pressure, covenant waivers and limited access to reported group cash.
Vedanta’s Response
Vedanta said the syndicated facility was arranged with six leading international banks, had been repaid and reflected normal lending arrangements.
ICBC’s relationship with the borrower
Bank Records and Risk Concerns
Internal records say ICBC joined as a senior lender and later commissioned enhanced due diligence after Welter Trading did not provide all requested regulatory information.
Vedanta’s Response
Vedanta said any ICBC exposure could have arisen through a secondary-market transfer and that it has no current relationship with the bank.
Outcome of the watchlist
Bank Records and Risk Concerns
The records show the loan remained under scrutiny but was ultimately repaid in full, with no credit loss.
Vedanta’s Response
Vedanta emphasized that the facility has since been repaid and said its disclosures have been transparent and consistent with its governance standards.
Key facts
- Total loan facility
- $500 million
- ICBC exposure
- Approximately $65 million
- Borrower
- Welter Trading Ltd., a wholly owned Cyprus-incorporated subsidiary of Vedanta Resources
- Watchlist year
- 2016
- Repayment year
- 2017
- Credit loss
- None recorded by ICBC
- ICBC exposure allocation
- $29 million through London, $20 million through Singapore and $15 million through Mumbai
Quotes
Vedanta spokesperson
Spokesperson for Vedanta Resources
“The syndicated facility was tied up with six leading international banks back in 2013 and since been repaid.”
indianexpress.com
“Any exposure held by ICBC could have arisen through such a transfer and there is no current relationship.”
indianexpress.com
ICBC client due diligence report
Internal 2017 report documenting compliance concerns about Welter Trading
“there was a failure on the part of Welter Trading Limited to meet its obligations to provide ICBC (London) PLC with the regulatory requirements we communicated to them”
indianexpress.com
Sources
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