CDB, Barclays tap mainland commodities sector

PUBLISHED : Thursday, 11 October, 2007, 12:00am
UPDATED : Thursday, 11 October, 2007, 12:00am

China Development Bank (CDB), the state-owned policy lender, has teamed up with British bank Barclays to tap the mainland's soaring commodities market.

Their strategic tie-up follows the mainland bank's purchase of a 3.1 per cent stake in Barclays in July and the London lender's failed bid to buy ABN Amro last week.

The alliance would focus on energy, metals and emissions, and could be extended after the first five years, the lenders said.

Barclays said it would work with CDB to develop commodity products origination and trading capabilities.

It would also enhance the mainland lender's commodities execution and risk management infrastructure.

In return, the mainland bank will pick Barclays as its preferred provider of commodity market risk hedging.

Demand for oil, steel, cement and minerals has surged as the country's industries ramp up output.

CDB and Barclays did not give further details, such as investments of their co-operative ventures.

'Barclays has enjoyed a strong, long-standing relationship with China Development Bank. I have no doubt that this arrangement will provide substantial long-term benefits for both parties,' said Robert Morrice, the chairman of Barclays Asia.

CDB paid Euro2.2 billion (HK$24.14 billion) for a 3.1 per cent shareholding in Barclays in July in a move that was seen to help the British bank's bid for ABN Amro.

Should Barclays win, the mainland bank would pay an additional Euro7.6 billion to increase its stake to 6.7 per cent.

Barclays withdrew its bid late last week as ABN Amro shareholders voted in favour of Royal Bank of Scotland's superior bid.