ABN Amro expands with new S'pore desk

Banking giant ABN Amro is keen to grab a bigger slice of the fast-growing commodity trade finance business in Asia.

The Dutch bank has concluded there is no better place to do that than in Singapore - a thriving regional hub for oil, metals and agri-commodities trading.

A month ago, ABN Amro set up a commodity Structured Inventory Product (SIP) desk - its first in Asia - to service its energy, commodities and transportation (ECT) clients.

This newly set-up desk with six staff is part of its aggressive plans to beef up its international presence in the ECT division.

It followed another recent move to open an office in Dallas to re-establish a foothold in the US oil and gas market.

The rationale of the Singapore move is clear: to better serve many of the bank's global and regional commodities clients who are moving to Asia.

"We have set up this desk here in Singapore as we want to be closer to our clients," said Mr Julien Moreau-Pernet, ABN Amro's Asia head of SIP.

Mr Moreau-Pernet, together with ABN Amro's executive director of commodities, Ms Ng Chuey Peng, run the new desk and both report to Ms Jacqueline Chang, managing director of commodities Singapore.

"We already provide SIP financing to clients based in Asia such as cocoa and coffee in Vietnam. (But) it's difficult to develop a product or meet our clients' needs if there's a six-hour difference," he told The Straits Times in an interview.

So far so good. The bank has closed five transactions in a space of three weeks.

Through the desk in Singapore, the bank is particularly keen to meet customer needs for additional liquidity, just-in-time delivery and inventory management in the base metals space in Asia - including China, which accounts for half of the world demand for the base metals - and also for agri-commodities in South-east Asia and Australia.

The SIP transactions are done through ABN Amro's wholly owned investment vehicle Icestar. The SIP differs from the classic trade financing in that in this instance, the bank buys and takes legal ownership of the physical commodities for a pre-defined period.

This way, clients are able to immediately monetise their stock positions. For the bank, the risks are lower too.

"As the bank becomes the owner of the physical commodity, there is ultimate security in providing the finance.

"And because the risks are lower, it allows us to price the product better for clients," he said.

Singapore's role as a regional commodity trade finance hub is growing not just for South-east Asia but also increasingly for the Middle East and North Asia.

Mr Moreau-Pernet said ABN Amro's latest move underscores Singapore's status as a growing regional hub.

Two months ago, Rabobank International Asia rolled out its first SIP desk in Singapore to service its food and agri-business and resources clients across the region.

anitag@sph.com.sg

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