ING eyes new property derivatives drive

LONDON, Oct 2 (Reuters) -ING Group (ING.AS) is plotting a new push into Europe's young real estate derivatives market after hiring two of the sector's most experienced market-makers.

ING has recruited Rawle Parris from ABN AMRO and Jose-Luis Pellicer from Goldman Sachs to help it develop coverage of the burgeoning market and promote property swaps as hedging tools for external and internal clients.

Although part of ING's financial markets division and therefore separate to ING Real Estate, the appointment of Parris and Pellicer could persuade ING -- one of the world's biggest bricks and mortar investors -- to increase use of property derivatives within its 100 billion euro ($139.5 billion) plus portfolio.

"The ING Group has already got great capabilities in the real estate domain and this is an extension of those capabilities," Parris told Reuters on Thursday.

"Every time a new counterparty comes into the market -- especially one the size of ING -- that's a new vote of confidence in property derivatives," Pellicer said.

Europe's infant property derivatives market offers over-the-counter trading mainly in swaps based on the total return on IPD's UK All Property index for fixed periods and in exchange for fixed interest payments.

Up to now, the market has been dominated by a small number of banks keen to make a market for property derivatives trading.

But ING's launch of a property derivatives team within its wholesale banking division comes as some investors consider increasing their use of swaps to alter property exposure without resorting to costly and time-consuming property transactions.

Since its conception, the vast majority of European property derivative trades have centred on UK's All Property index but newer markets are being nurtured in mainland Europe, Asia and North America.

"The ING franchise is global but I think you can say that the property derivatives market is deepest in Europe, and particularly in the UK. We will start there but we have global ambitions for this product," Parris said. (Reporting by Sinead Cruise; Editing by Jon Loades-Carter) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)