Rabobank plans to streamline its trade and commodity finance offering by terminating operations in London, Shanghai and Sydney, GTR can reveal.

In a letter to clients sent on January 11, the Netherlands-based lender says efforts to make its trade finance offering more cost-effective have been “accelerated by rapidly changing global markets due to the Covid pandemic, trade wars and changing banking landscape”.

“In addition, significant fraud and default cases in our line of business, have forced us to carefully review our organisation,” it says.

As a result, trade and commodity finance activities will be terminated in Rabobank’s London, Shanghai and Sydney offices.

Other wholesale banking activities in those locations will continue, and dedicated trade finance teams will remain active in Utrecht, Singapore, Hong Kong, New York, São Paulo, Buenos Aires and Nairobi.

“We understand this decision might impact (part of) your business and potentially requires you to find alternative financing,” the letter adds.

“In order to ensure a smooth transition in these impacted locations, we strive to mutually agree on approach and timelines or potentially find other financing solutions to ensure minimal impact on your business.”

A Rabobank spokesperson tells GTR its trade and commodity finance operations will continue to focus on the agri, energy and metals markets, adding that the changes to office arrangements “will not materially impede its global geographical coverage”.

Greater China trade finance operations will be moved to Hong Kong, while European activities will be centralised within the bank’s headquarters in Utrecht.

“Trade and commodity finance will further align its business with the sustainability and energy transition agendas in all three commodity markets,” the spokesperson adds.

GTR understands that the bank does not intend to offload clients or consolidate activities, and that staff in the locations that are closing are likely to be offered roles in other areas or given the option to relocate.

Rabobank’s decision follows comparable actions by other European lenders. Most drastically, ABN Amro announced in August last year it would exit the trade and commodity finance sector entirely, while ING Bank is consolidating its wholesale banking offering by focusing on a smaller number of core clients.

Though ING Bank emphasised its decision was unrelated to the fraud scandals that plagued the commodity finance sector last year – particularly in Singapore – ABN Amro suffered significant losses following the collapse of energy trader Hin Leong in April.

At that time, Hin Leong also had outstanding debts to Rabobank of around US$230mn. The bank says it cannot comment on individual client relationships.