LAUSANNE, Switzerland, April 2 (Reuters) - Globalcommodities trading is undergoing profound changes as banks pullout from the sector while trading houses adapt to newregulations and expand into physical assets.
Top executives and co-owners of some of the world's largesttrading houses discuss new trends at the FT Commodities Summitin Lausanne, Switzerland this week.
The following are some of their comments made on Wednesdayat the event. For selected comments from Tuesday, click on.
JEFFREY DELLAPINA, CFO, VITOL GROUP
On banks exiting commodity trading:
"I don't think it's a great thing because I think they havetremendously activated interest in the commodity spaceespecially through the institutional investors market, throughthe structured products market and that just creates liquidityall along the curves. And to sustain growth with the leastamount of risk, we want liquidity in these markets, so we arenot particularly happy about it."
On Vitol buying Shell assets in Australia:
"I don't feel there is a price bubble at the moment in Asianand European energy assets just yet."
On whether Vitol is looking into a listing:
"I think we do periodically revisit the issue because itdoes deserve attention but I think we have convinced ourselvesthat the model we have had for a long time seems to work verywell for us. We are not constrained capital-wise at the momentand I don't really foresee any of our plans being interrupted bya need for more equity capital. And we have a number ofco-investors that are happy to look at other large investmentswith us so I don't think we need to go that route for a while."
VINOD AACHI, GLOBAL HEAD OF STRUCTURED TRADE FINANCE ATSTANDARD CHARTERED BANK
On challenges of Basel III capital standards:
"Glencore and Vitol will manage the costs (of Basel III) butsmaller players will be left to the mercy of the market."
GRAHAM DONNELL, DIRECTOR & GROUP GENERAL COUNSEL AT STEELTRADING FIRM STEMCOR
On the company's restructuring:
"The standard response to a stress scenario, a default, isto go into what is called a standstill. But trading companiescan't stand still. They need to move. They need to keep thebicycle wheels turning. So that was a huge challenge for us. Wedefaulted on one facility, cross defaulted incredibly quicklyinto all our other facilities and we had to keep the diesel inthe engine and it was the relationships with our trade financelenders: HSBC, BNP, Natixis that pulled us through that becausewhat you need is a coordinated group that you can talk to andcome to a consensual solution."
"When I asked my CFO before I came to this panel what wasthe lesson (we learnt), he said: fewer banks, strongerrelationships. We did the reverse."
MARCEL VAN POECKE, MANAGING DIRECTOR AT CARLYLEINTERNATIONAL ENERGY PARTNERS
"Why is there a fit between private equity and commoditiestraders? Capital is very important for traders, especially whoare not listed, diversification and access to top-tier operatorsis also important".
"I've never seen the market with so many good assets forsale," said Van Poecke, adding that those assets are beingoffered as major oil companies are refocusing and independentproducers are expanding.
"Investors say 'We don't need you to be an integratedcompany' ... They say: 'We can buy BP for upstream and Valerofor downstream'."
"My guess is that private equity is becoming a biggerbusiness in oil and gas. You will see more sovereign wealthfunds and other capital coming in and looking foropportunities." (Reporting by Silvia Antonioli and Dmitry Zhdannikov; Compiledby Dale Hudson)
