Business

Mitsubishi to shut down Singapore trading unit after $426 million loss

TOKYO : Mitsubishi Corp, Japan's biggest trading group, said yesterday that it will shut down its Singapore-based crude oil and fuel trading unit following revelations in September that a trader had racked up enormous unauthorised trading losses.

The unit, Petro-Diamond Singapore, will incur losses of 34.2 billion yen (S$426 million) before taxes after closing the unofficial trading positions, which may mean the final debt for the unit would be as high as 30.8 billion yen.

Mitsubishi said in September that trader Wang Xingchen, also known as Mr Jack Wang, lost US$320 million (S$435 million) in unauthorised transactions in crude oil derivatives and the matter had been reported to the police.

These were the first losses of its kind at Mitsubishi, which invests in everything from salmon to natural gas and trades many commodities around the world.

Mitsubishi will shift some oil and fuel trading back to Tokyo while closing out outstanding positions and liquidating Petro-Diamond, chief financial officer Kazuyuki Masu said during the compan's first-half results briefing yesterday. Mr Masu did not say how many staff would be affected by the shutdown.

Mitsubishi said in its earnings statement that it will cut full-year earnings forecast because of the Petro-Diamond losses and lower coal prices. It now expects profit to be 520 billion yen for the year through March, down from 600 billion yen forecast earlier.

First fiscal-half profit fell 22 per cent to 242.4 billion yen, the company said. - REUTERS

BUSINESS & FINANCE