July 23, 2014 / 4:16 AM / 3 years ago

RPT-LME approves BTG Pactual to operate warehouses in Singapore

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SYDNEY, July 23 (Reuters) - Brazil’s BTG Pactual has received a green light from the London Metal Exchange (LME)to set up warehousing operations in Singapore, marking the investment bank’s first foray into Asia as builds out its physical metals business.

In a notice to members on Tuesday, the LME said it has approved BTG Pactual Commodities Warehousing to store aluminium, aluminium alloy, copper, nickel, lead, tin and zinc in the city state.

Singapore marks the third LME location this year for the Sao Paulo headquartered bank, one of the few that is expanding in commodities.

Among a string of big hitting commodity hires, BTG Pactual last year took on Shon Loth, a metals warehousing expert formerly with Noble and Pacorini Metals, now owned by Glencore.

The bank registered two locations in the United States - in Detroit, the automotive hub, and Owensboro, Kentucky - earlier this year and has also applied to register its warehouses with the U.S. exchange CME Group.

The expansion comes amid a large scale review of credit and warehousing practices in Asia after a suspected metals financing fraud in China’s Qingdao port, the world’s seventh busiest and China’s third biggest.

Most global metals warehousing companies already have a presence in Singapore. Singapore-listed CWT Ltd operates 11 warehouses, C Steinweg runs 10, Pacorini Metals has eight, Henry Bath runs five, Singapore-based GKE Corp. , a part-owned unit of Louis Dreyfus Corp has three, H&M Metal Warehousing two, and WorldWide Warehouse Solutions, a unit of Noble Resources, runs one.

BTG Pactual’s expansion follows a shakeup that has seen several big banks quit the asset class, including Credit Suisse which shut its trading desk this week, just days after Morgan Stanley renewed its commitment to expand into commodities.

Last year, the Brazilian bank was interested in buying JPMorgan Chase & Co’s physical commodities business including the Henry Bath warehousing unit.

Others are also expanding. Scale Distribution, part-owned by Australia’s Macquarie Group Ltd, and Whelan Metals LLC have both set up shop in Detroit this year.

Reporting by Melanie Burton; Editing by Richard Pullin

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