SINGAPORE (Reuters) - Credit SuisseCSGN.VX aims to expand its commodities business across Asia to capitalise on demand growth in the face of volatile markets and tightening regulations in the West, a senior bank executive said.
“Credit Suisse has a strong position through its fixed income and equities businesses in Asia,” Alexander Toone, the bank’s head of commodities for Asia-Pacific told Reuters.
“The plan for us is to build out the commodities business and really leverage the strength of the bank in the region.”
The Swiss bank’s growth plans in Asia’s commodities and energy sector is in line with others such as Standard Chartered, Societe Generale, Australia’s Macquarie and Australia and New Zealand Banking Group Ltd.
Credit Suisse is keen to ride on growth in Asia which produces and consumes a significant proportion of commodities globally, he said.
“High and volatile commodity prices mean that companies are becoming more and more sophisticated in understanding their risks and how they manage that risk,” said Toone who spent 10 years at Barclays Capital before joining Credit Suisse in February 2007.
A huge amount of wealth that has been created in Asia will also drive investment in commodities from retail through wealth management business, he said.
“With all the regulatory change occurring in the U.S. and Europe, we’ve seen more and more of the discretionary hedge funds business relocate to Asia,” Toone added.
The U.S. House of Representatives last week approved the landmark overhaul of financial regulations, marking the most sweeping revamp of Wall Street rules since the 1930s in the wake of the 2007-2009 financial crisis.
The senate is set to act on the bill in mid-July, which will give the Commodity Futures Trading Commission (CFTC) oversight of the $615 trillion over-the-counter derivatives market, require most swaps to trade via clearing houses, call for extra capital and margin for certain large players and give the CFTC mandate to limit positions in certain markets.
The EU is debating controversial rules for hedge funds and is at an impasse in talks to set up watchdogs for policing banks, insurers and markets.
The West-East shift is “very much driven by just how important Asia is now and how important it is to really understand what’s going on in Asia from a macro and a micro perspective,” said Toone, who relocated to Singapore from London eight weeks ago.
Toone, who was previously heading global commodities sales at Credit Suisse, has been tasked to drive the bank’s expansion in Asia.
The bank already has commodities business in Australia and is looking at expanding across Asia in China, Korea, India and Japan.
Toone sees big opportunities in the bulk commodities market such as thermal coal, iron ore and freight, in addition to energy and metals.
“It’s a priority to build the business. I think the bank will be opportunistic and look at each opportunity on a case-by-case basis.”
However, Credit Suisse has no plans to start physical trading as an alliance with Swiss commodities trader Glencore formed three years ago provided insight to various markets, Toone said.
“It’s really useful to have an understanding of what’s happening in the physical market and be able to provide solutions to clients,” he said.
The alliance, which trades crude oil and oil products, industrial and precious metals, agricultural, coal, freight and some bulk commodities, gave the bank access to such information without having to build any infrastructure, he said.
Despite the rush of banks and trading houses expanding in Asia, Toone said Asia was still a “very immature market” with plenty of expansion opportunities.
“We’re in a very early stage in that development. The expanding opportunity will provide more than enough opportunities for banks and trading houses in the region,” he said.
(Editing by Ramthan Hussain)