These contracts had clear limits on how much Citic Pacific could gain from each transaction, but no limits on how much Citic Pacific could lose, the company said.
Other Chinese companies have also expanded in Australia, particularly in the mining sector, and have limited experience in managing the currency risks associated with their new international ventures. This raises the possibility that Citic Pacific may not be the only company with losses, said Dariusz Kowalczyk, the chief investment strategist at CFC Seymour, a Hong Kong securities firm.
"The question is whether it is an isolated case," Kowalczyk said. "I would be surprised if it is an isolated case because the same banks were probably selling the same products to other Chinese companies."
Many banks devise such contracts for corporate clients. Citic Pacific did not identify who had sold it the currency contracts.
The Citic Group, a giant Beijing-based state investment company that holds 29 percent of the shares in Citic Pacific, said it had made a $1.5 billion standby loan available to Citic Pacific.