Filings posted to the Hong Kong Company Registry showed that HSBC has released assets stopped from trading from Zhong Jun Resources, a Hong Kong company allegedly linked to financial fraud in Qingdao Port, on July 25.

But spokespeople for the bank declined to comment further on whether this meant an end to reported delays in trade finance approvals processes that have been put in place at banks following issues with collateral being pledged multiple times at the port.

In a circuitous development, an investigation into a Qingdao government official led to business connections with a large metals trader, Dezheng Resources. As lenders at Chinese banks like CITIC (as well as international banks like Standard Chartered, BNP Paribas, and HSBC)  found out the company was being investigated, they sought to secure collateral that the company had pledged against loans.

But the banks reported that metals were missing. Later reports elaborated that assets had been pledged multiple times to secure loans to Dezheng group entities.

On June 9, CITIC Resources, an aluminium smelter and commodity trading company, announced that it had been unable to confirm ownership of alumina and copper assets pledged to the company.

While fraud in the commodities trading market would be immaterial to most treasurers, uncertainty surrounding the event led to delays, and even outright stoppage related to China trade finance.

“Out of an abundance of caution, some banks have suspended credit approvals for trade finance facilities until conclusive findings from the Qingdao port investigation come to light,” said Rob Caldwell, a partner at DLA Piper, which structures trade credit deals in China.

After seeking comment from several banks, such as HSBC and DBS, as well as law firms, like DLA Piper, RPC (Reynolds Porter Chamberlain), and other firms involved in Qingdao Port litigations, it appears these delays have no clear end in sight. It’s even unclear when results of government investigations will come to light.

“The banks are being incredibly quiet about it,” a lawyer with a firm representing trading clients involved in Qingdao Port litigations told CT.

HSBC’s decision to release assets held from Zhong Jun Resources was made public only after filings with Hong Kong’s public Company Registry.

Records in the registry show loans to Zhong Jun Resources within the last year from Standard Chartered and BNP Paribas. Standard Chartered filed suit against Chen Jihong, the owner of Zhong Jun Resources and Dezheng minerals in Hong Kong on July 14.

With the lawsuits flying, banks have declined to publicly comment on developments. Resolutions to trade disputes in China can take years, and treasurers will find that information about the consequences will be hard to come by.

The lawyer whose firm is involved in Qingdao Port legal actions estimated that court actions could take two to three years to come to any resolution. Further, he speculated, court decisions and arbitration results in China involving state players are often delayed based on the political clout of the litigants.

Given that Qingdao Port cases involved Chinese state-owned banks, the timing of ultimate outcomes will depend on them, he said.

Corporate treasurers and finance teams concerned that their own trade finance might be affected in the long term should make enquiries to their banking relations. With lawyers involved, they’ll have better luck than CT.