Hundreds of clients of big state-owned lender Bank of China (BOC) plan to sue the bank over $85 million in losses incurred via the purchase of crude oil investment products.
Representatives of up to 1000 investors burned by BOC’s Crude Oil Treasure (原油宝) product announced on 25 April that they had been in contact with law firms and planned to file a class action against the bank requiring the following:
- Recovery of all principal due to invalidity of contract,
- Suspension of transactions from 22:00 4 April, and compensation in accordance with this price,
- Where the guarantee sum is less than 20%, the bank should forcibly close positions and provide compensation on this basis.
Hundreds of BOC’s retail investors lost around 600 million yuan (approx. $85 million) after placing bets on West Texas Intermediate via the Crude Oil Treasure instrument.
The “Crude Oil Treasure” product enabled China’s domestic investors to tap WTI oil futures without the need to launch an offshore account. The product did not permit leverage and required 100% margin.
A plunge in oil prices to below zero at the start of the week has left these investors owing 400 million yuan to BOC, on top of around 200 million yuan in initial losses.
On the evening of 24 April BOC announced that it was “deeply troubled” customer loses, and would bear corresponding liability under a legal framework.