ABN Amro Plans Metals Brokerage as Commodities Unit Expands

ABN Amro Group NV plans to build metals-brokerage business in London and Singapore as early as next year as it aims to expand in commodities financing and double its revenues.

“We are keen to develop to establish our metal brokerage business, which we now only do out of New York,” Piet-Hein Ingen Housz, head of metals and steel at ABN Amro, said in an interview in London. “We want to be present in the three main time zones either in 2014 or 2015. This also depends on the opportunities to hire the right people.”

ABN Amro aims to double the size of its commodities business in terms of revenue by 2017 and also expand the number of staff considerably, Jan-Maarten Mulder, global head of commodities, said in the interview on Oct. 7. The bank is focusing on trade finance and expansion will be on the back of the existing business in oil, metals and agriculture, he said.

The bank will need a team of about six traders to re-establish its London Metal Exchange metals brokerage in London and Singapore and has been talking with teams and individuals, Housz said. ABN Amro has a brokerage team for agricultural commodities focusing on cocoa, coffee and sugar.

Board Mandate

“We’ve got a strong mandate from the board to selectively grow this business by further growing our product range,” Ingen Housz said. “We are more committed than many of our peers.”

ABN Amro is among banks expanding in commodities as some of the biggest lenders retreat amid slumping revenues. Russia’s VTB Capital said last week it may expand into industrial-metals trading next year and Brazil’s Grupo BTG Pactual entered commodities this year.

Revenue from raw materials at the 10 biggest investment banks fell 20 percent in the first half, according to analytics company Coalition. JPMorgan Chase & Co. said it plans to exit owning and trading physical commodities, and Morgan Stanley held talks last year with Qatar’s sovereign-wealth fund about selling a stake in its raw-materials division.

ABN Amro’s energy, commodities and transportation business employs 400 people, including administrative staff, Mulder said. About 70 percent of them are in the commodities unit, he said. ABN Amro opened a representative office in Moscow last week as part of the expansion, he said.

The Standard & Poor’s GSCI gauge of 24 raw materials fell

2.2 percent this year after almost tripling in the past decade.

“We don’t believe the supercycle is over,” Ingen Housz said. “Prices won’t come back to the 2007 levels, but they won’t go back to where they were 10 years ago. The growth story is quite important.”

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