Germany's Deutsche Bank AG and Belgium's KBC Group NV have blocked some of the trader's Singapore bank accounts while carrying out compliance reviews. Several other lenders have cut credit lines to the company, too.
The freezes follow a Bloomberg report last week that big commodity traders had stopped working with Radiant World over concerns it gave banks fake documents about iron ore trades. The two biggest iron ore miners, Rio Tinto and Vale, have now taken Radiant World off their approved customer lists.
Radiant World is private and barely known outside metal markets, but it grew fast and now ranks among the world's largest iron ore traders, with annual revenue of about $12 billion.
Its scale made it a significant counterparty for banks that finance global commodity flows.
Iron ore is expensive to handle, and a single cargo can be worth far more than a trader's own net worth. So firms like Radiant World lean on credit from suppliers, customers, and banks to keep moving.
That financing can take a few forms. Banks lend against invoices and shipping receipts, they hold cash in accounts, and they use repo agreements, deals where the bank temporarily owns the cargo until the trader repays the loan.
Arab Bank Switzerland Ltd., one of Radiant World's key financiers, has halted new letters of credit (bank promises to pay a seller after shipping documents check out) for its iron ore shipments. ICBC Standard Bank Plc has halted repo financing with the company. Societe Generale SA has been reducing how much money it has at risk, a move it started months ago after becoming aware of fraud allegations.
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An earlier Bloomberg report said Jefferies' Point Bonita fund and Intesa Sanpaolo were examining their risk. Intesa has set aside money to cover a possible loss.
Cargill cut ties with Radiant World months ago. Glencore is not taking new business, and CEO Gary Nagle confirmed Wednesday that the company was "checking how to exit" the money it still had at risk with Radiant World.
A Trafigura spokesperson said, "We do not trade with Radiant World."
A December 2024 presentation showed how broad the network once was. It listed Rio Tinto and Vale among Radiant World's supplier and partner network, along with Glencore, Cargill, Trafigura, BHP, and CSN Mineração.
Rio and Vale sell most of their iron ore under long-term contracts, but they also sell cargoes on the open market to traders they approve.
Radiant World disputes the allegations. A spokesperson said the company "conducts its business to the highest commercial and legal standards" and would not comment on specific counterparties.
The spokesperson added: "Radiant World remains well capitalised with healthy liquidity, supported by a consortium of long-standing banking partners. We continue to meet our obligations to our financing and trading partners and remain well on track to deliver on our Q4 targets."
Deutsche Bank, KBC, Arab Bank Switzerland, ICBC Standard Bank, and Societe Generale did not comment. Rio Tinto, Vale, BHP, and CSN also declined to comment.
Trust is the whole game when a trader works with borrowed money. Banks lend against paperwork, and when they no longer trust a company's paperwork, they pull back fast.
Iron ore prices hit a low this week, at levels not seen in more than a year.
The easiest way this story touches your portfolio is through iron ore prices. They are already near that low.
If more banks follow Deutsche Bank and KBC, trade could get tighter, and prices could stay weak.
Most people will never buy iron ore, but it becomes steel used in buildings, cars, and bridges. When a company at the center of that market loses the trust of its lenders, the ripple can reach mining stocks and raw goods prices.
For now, Radiant World says it is healthy and on track. The question is whether its banks agree.
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