ING Groep, the Netherlands’ largest lender, has indicated that it plans to expand in both commodity trade finance and cash management to take up opportunities created by other European banks scaling back lines of business.
The Dutch bank was recently tipped as a buyer for the Turkish operations of HSBC, but the latter has stated that offers for the unit were “not in the best interests of shareholders” and it had decided to retain the business.
In an interview carried by Bloomberg, ING’s chief executive officer (CEO), Ralph Hamers, said the group was not deterred by tougher regulatory demands and plunging prices that had persuaded many European banks to scale back or pull out of commodity trade finance.
“Some of our competitors are withdrawing from some of the activities that we’ve actually determined as strategic,” said Hamers. “They’re soul-searching and don’t know where to go.”
He said that the perceived high risk of the commodities business had improved conditions for those banks remaining in the market. “You can actually do lower risk transactions at a higher margin with better collateral because competitors are withdrawing,” Hamers told Bloomberg.
ING sees opportunities “in the industry lending area, the short-term trade environment” of oil, gas, metal and mining, he added. The bank has expanded its commodity trade finance operations in Geneva.
Hamers said that ING is also considering a bigger role in cash management as banks including Royal Bank of Scotland Group (RBS) scale back their commercial banking operations. France’s BNP Paribas currently leads the market with 38% of European companies using it for cash management services, according to Greenwich Associates data.
A survey conducted by Capital One suggests around five in six plan to implement new treasury management products and services in the coming year.
The European Central Bank will extend its quantitative easing programme for nine months beyond next March, but scale back the level of bond buying from €80bn to €60bn a month.
The agreement, after three years of debate, raise questions on future investment demand, but Fitch Ratings doesnʼt anticipate major market disruption.
The European Commission fined Credit Agricole, HSBC and JPMorgan Chase a total of €485m for manipulating the price of the financial benchmark.