A subsidiary of Citic Securities Co Ltd, China’s largest investment bank, has signed an agreement with a unit of global trade house Trafigura to set up a joint warehousing and logistics unit in China. The new company will be run by Citic Global Trade (Shanghai), and Impala Terminals, and will focus initially on developing a warehousing, logistics, freight forwarding and terminals business in Shanghai, before expanding across China and abroad, Trafigura said in a statement. The joint venture will work to “international standards of security and operating processes,” it said. The spotlight has turned on China’s warehousing network after an investigation into metals financing fraud at the country’s third biggest port of Qingdao surfaced in early June. Both Trafigura and Citic’s Australian trading unit were burned by the scandal that resulted in cumulative losses among banks and trading houses estimated to top $1 billion, with local media estimating domestic banks had exposure of more than $2.5 billion. Private metals trading firm, Decheng Mining, allegedly duplicated warehouse certificates stored at the port to pledge a metal cargo multiple times as collateral for bank loans. As a result, banks have clamoured for tighter security before extending credit, with a particular requirement for logistics companies to own and operate their own warehouses, rather than relying on third party operators, a common practice in China.