Total losses from a planned crude oil product marketed by the Bank of China to retail investors could surpass ($1.27 billion), the financial news outlet Caixin disclosed Sunday, citing official sources.
Over 60,000 individual investors participating in the structure lost funds estimated as much as $593 million, Caixin reported. Reuters said that one third of the total had shelled out over $7,000 each.
The crude oil "bao" of the Bank of China is offered to individual buyers and is correlated with futures contracts for local and international crude oil, including West Texas Intermediate and Brent.
Bank of China said it was extremely troubled by investor losses that had invested in its trading commodity crude oil futures and would seek to protect their investments.
Investors cried foul regarding the BOC's decision to settle the trades at record negative rates, arguing that more should have been done to safeguard their interests.
The bank divulged in a statement late Friday that it had sent multiple messages through various networks, including short messaging system and telephone calls, since April 6 to inform investors of the dangers associated with the recent oil price fluctuation.
Bank of China Ltd's projection of devastation to retail investors from the breakdown in a product connected to U.S. crude futures grew 11 times to over 7 billion yuan (US$ 988 million) as it merged data from its nationwide network, sources with knowledge of the issue disclosed yesterday.
The estimation of the lender's losses to clients across China grew from around 600 million yuan as more data was collected from its over 10,000 outlets, the sources, who requested anonymity, added.
The Bank of China last week settled sessions after the WTI futures prices declined under the $0 mark for the first time in history, ending at -$37.63 a barrel as traders paid just to get rid of all the stockpile.
The BOC kept between 24,000 and 25,000 long positions, with each one having the equivalent of 1,000 barrels, leading to a projected loss of $819 million.
In a media statement, the BOC said they will do their best to protect clients' interests and in due course will relay the latest developments to them.
The bank pointed out that it will continue to closely keep in touch with relevant institutions with regard to the unusual price changes on the crude oil market on April 20.
Prices have plunged worldwide this year as a result of the rising economic effects of the pandemic, a price conflict caused by Saudi Arabia and Russia, and a shortage of storage for surplus inventory.
