A United Arab Emirates-based commodities firm is shutting down trading desks after banks pulled financing amid the coronavirus, the latest casualty in a global wave of upheaval for middlemen and their lenders.
GP Global Group decided to stop trading commodities from energy to agriculture after banks withdrew credit lines vital to the business, according to people familiar with the matter.
The company, which has offices in Dubai, has laid off employees around the world, the people said, asking not to be identified because the information isn’t public.
“We are currently undergoing financial restructuring, and under this process we had to close a few small businesses and let some people go,” a spokesperson for GP Global said Thursday in an emailed response to questions from Bloomberg. The “majority of our trading desks are all alive as we speak.”
Commodity traders have faced harsh publicity in recent months after several came under financial stress and others met with fraud allegations, saddling banks with massive losses. That prompted lenders such as ABN Amro Bank NV, BNP Paribas SA and Societe Generale SA to scale back or even pull out of the business.
Trading firms have buckled since the coronavirus crushed energy demand and triggered an oil-price plunge. After losing about three-quarters of its value at the onset of the pandemic, crude is still down about 30% this year.
Lenders’ exposure to GP Global is just over $1 billion, the people said.
The trader, known as Gulf Petrochem Group until 2018, said in July it was restructuring its finances after lenders withheld credit lines. A month later, it appointed London-based Quantuma LLP as an adviser.