(Repeats story published late Thursday; no change to text)
* Bank buys stake in Liverpool-based Scale Distribution
* Macquarie, others looking to bypass LME delivery backlogs
* Macquarie employee on Scale's board
By Melanie Burton and Susan Thomas
SINGAPORE/LONDON Feb 14 Australia's Macquarie
Group has bought a stake in a small British warehousing
company, sources with direct knowledge of the matter said, in
part to sidestep queues and other problems plaguing the London
Metal Exchange's warehousing system.
The bank has taken a minority stake in Scale Distribution,
which runs an LME-listed warehouse in Liverpool, the sources
Paul Plewman, Macquarie's head of Fixed Income, Currencies
and Commodities for Europe, the Middle East and Africa, joined
the board of Scale Distribution in July, records from Companies
House, the United Kingdom's business registry, show.
"The company they already own is a warehouse company called
Scale Distribution. They are based in Liverpool, but I also hear
they have been picking up some space in the U.S.," one
London-based trader said.
"We had heard they have been working on a deal for two or
three years. It was a long time coming. Interestingly enough,
about six weeks ago, they said they have a big load of metal
coming," a U.K.-based warehousing source said.
Macquarie's stake pales in comparison to the ranks of
Goldman Sachs, JP Morgan, Glencore and
Trafigura which have all snapped up global
warehousing companies in the wake of the 2008 financial crisis.
Critics argue that warehouses tied to trading houses and
banks are taking in more metal than they deliver and this has
artificially constricted supply and inflated premiums, or
surcharges, which consumers pay to get metal.
And because warehouses have guaranteed rent, they have
fought off industrial users by paying juicer incentives to
attract metal, reinforcing their already powerful position.
The practice has proven controversial, with Hong Kong
Exchanges and Clearing Chief Executive Charles Li saying last
July it could have caused the exchange to walk away from its
$2.2 billion takeover of the LME, clinched in
"It seems logical," said a metals industry source in Europe
regarding Macquarie's move. "There are independent
LME-registered warehouses out there. However, the market has
been totally skewed by these games, it's impossible to get
Sources said Macquarie's strategy was to protect its
customer business from warehouses at ports controlled by the big
players - and that the bank is just one of several mid-tier
banks and trading houses taking a second look at securing their
"We've looked at warehousing investments on and off over the
years, but the reality is... we're working outside the LME space
now anyway, where warehouses can do those services very
competitively," a London-based executive at a trading house
"Never say never, we may well invest in some space at some
point," he said. "There are very attractive returns if you can
get metal, but that's the big issue," he added.
(Editing by Jason Neely)