(Corrects paragraph 18 to show team will be led by Michel
* UBS lures talent from French giant BNP Paribas
* Regional Swiss banks target emerging markets
* New banks, traders start moving into sector
By Emma Farge
GENEVA, April 13 Swiss banks are expanding
aggressively in commodity trade finance and have lured top
talent away from dominant French rivals as refinancing woes
force them to curb their activities.
Commodity trade finance, the low-risk and low-margin
business of lending cash to arbitrage copper shipments and
import grain, has been in crisis since French banks started
cutting back last year due to a shortage of dollar liquidity.
Credit Agricole withdrew from the market in
December and market leader BNP Paribas has cut jobs,
threatening small trading shops and helping to support high
BNP Paribas has shed two top executives in trade finance
Pascal-Olivier Marclay and Jacques-Olivier Thomman since late
2011 and reduced its Swiss staff, industry sources said.
It said earlier this month its consolidation plans are now
complete and that it is planning to launch a new trade finance
But industry experts doubt that French banks, which formerly
accounted for about half of the $1500 billion a year in global
lending, will be able to recoup lost ground as others fight for
"The difficulty of French banks to refinance themselves in
dollars has pushed some clients to knock on the doors of Swiss
banks," said Philippe Steiner, Geneva-based commodity trade
"UBS has shown a high interest in acquiring the mid and
upper range former Soviet Union trading specialists in
Switzerland that were the historical client base for the
BNP's Marclay has since joined UBS as head of
commodity trade finance and about nine other executives have
joined as part of a broader plan to bolster its team in Geneva
and Lugano, industry sources said.
Credit Suisse, already active in trade finance for
20 years, said it has added five new relationship manager roles
in Geneva and Zurich since the start of the year, boosting its
client-facing Swiss team by around 10 percent.
"The partial withdrawal of certain banks creates additional
opportunities for Credit Suisse to acquire new clients and to
expand the business activities with existing clients," said a
spokesman for Credit Suisse.
UBS declined to comment.
The key advantage of Swiss banks is that they are
capitalised in Francs and costs for dollar-based funding, the
dominant currency in commodities markets, are relatively low.
They are also located next to top clients like Glencore
and Cargill in the low-tax trading hubs of Geneva and Zug.
Industry sources also said regional banks La Banque
Cantonale de Geneve and Banque Cantonale Vaudoise are also
recruiting as part of a strategy to target growth in emerging
markets in Asia and South America.
Niaz Haq, head of banking for recruitment firm Serendi,
said he expected French banks to continue to shed staff due to
both lower salaries and a sense of diminished opportunities.
"The French banking staff will continue to be good sources
of top flight candidates for growing banks," he said.
Banks in emerging markets like India are also seen as likely
new entrants in the field since they will have an interest in
facilitating purchases of raw materials. Hinduja
Group's Swiss-based private banking arm said on Thursday it
plans to double its commodity trade finance team by hiring five
Industry sources told Reuters the team would be led by
Michel Layat, and his deputy will be Alexandre Currit, formerly
at Switzerland's Banque de Commerce et de Placements.
Trading houses are also seen as prime candidates to snatch
some of the French banks' share following the example of
Trafigura's fund unit Galena.
Some traders already provide financing to customers through
pre-production offtake-linked loans where a buyer can borrow
money temporarily ahead of a purchase from the trading house's
own mine or refinery.
Matthew Parish, partner at Geneva-based law firm Holman
Fenwick Willan, said that trading houses may have the upper hand
on banks as they may be exempt from upcoming Basel III
regulations on capital requirements.
"Traders could start financing themselves, or each other,"
said Matthew Parish, partner at Geneva-based law firm Holman
Fenwick Willan. "Larger traders could provide funds to smaller
ones, to keep the market liquid."
(Editing by William Hardy)