StanChart sees solid growth for commodities
Singapore, May 18, 2012
Standard Chartered Bank's commodities trading unit may post a double-digit growth in 2012, as it boosts its share in the Asian market while the global financial crisis forces rivals to pare down operations in the region, a senior executive said.
Airlines, power companies and oil refineries are all expanding in Asia to feed its rapid economic growth, giving Asia-focused banks like StanChart an advantage over peers hit by their bigger exposure to the slowdown in the West.
'The biggest growth engine for us is more market share and more volume in Asia,' Cyril Youinou, StanChart's global head of oil trading, told the Reuters Global Energy & Environment Summit. He declined to give a growth forecast.
'It has been a good crisis for us in the last three years as our credit rating has been upgraded while everybody else has mostly been downgraded and our clients have noticed this.'
London-based Standard Chartered gets more than two-thirds of its income in Asia.
The bank expanded its commodities trading in 2008 after hiring a group of oil traders led by Arun Murthy from the now-defunct Lehman Brothers. Its focus in Asia also helped as the global financial crisis has forced North American and European banks to scale back commodities trading in the past four years.
'A lot of clients that we are talking to have been a bit upset to see some of the banks that they have been trading with in the past closing their commodities or the Asia desk,' said Youinou, one of the ex-Lehman traders who joined in 2008.
French bank Natixis became the latest victim of the European debt crisis as it plans to close its commodities brokerage division. Credit Agricole, BNP Paribas and Societe Generale have all taken steps to cut exposure to dollar financing, reduce debt and boost capital ratios.
StanChart, which saw a 63 percent jump in commodities revenue in 2011, currently has 4,000 corporate clients that have commodities exposure but it offers commodities trading services to only 500-600 of them. As part of its growth plans, the bank will target to tap this pool of customers, Youinou said.
The unit started physical trading for oil and metals in 2010 and has seen its Oman crude trading volume on the Dubai Mercantile Exchange rise by 50 per cent in the first quarter of 2012 from the same period a year ago, he added.-Reuters