China broker GF Securities pays US$36.1m for Natixis trading unit

Chinese firm pays a reported US$40m for firm's London-based commodities trading unit

PUBLISHED : Tuesday, 06 August, 2013, 12:00am
UPDATED : Tuesday, 06 August, 2013, 5:00am

One of China's top securities brokers has bought the London-based commodities trading unit of French bank Natixis, in the latest move by Chinese institutions to expand into natural resources markets.

Western banks that trade raw materials face increased regulatory and political pressure, with some market leaders such as JP Morgan considering selling, spinning off or clinching strategic partnerships for their commodities desks.

A statement posted on the Shenzhen stock exchange website said GF Securities' wholly owned subsidiary, Hong-Kong GF Futures, acquired British firm Natixis Commodity Markets for US$36.1 million.

Chinese companies have long been expanding into commodities trading amid booming demand for resources at home. Chinese oil firms have amassed powerful trading desks in Europe and the United States.

But while China's massive demand for resources, fuelled by its rapid industrialisation, has underpinned worldwide markets for everything from oil to iron ore, Chinese banks have been relatively slow to embrace commodities trading.

Last week, sources said South Africa's Standard Bank was in talks to sell its London commodity trading business to its biggest shareholder, Industrial and Commercial Bank of China.

Last year, Bank of China became the first Chinese member of the London Metal Exchange.

Natixis has a midsized commodities trading desk employing several dozens of people with a focus on metals and energy.

On Sunday, the Journal de Dimanche reported Natixis planned to shed 500 to 700 workers with a voluntary departure scheme that was to be negotiated with unions in September.

"Several departments will be reorganised at Natixis," a union source had told the paper. "There will be a lay-off plan before the end of the year."

Banks worldwide are cutting jobs as stricter regulations and euro-zone worries take their toll on trading income and investment banking units.

Many began shrinking several years ago and are now cutting more deeply as they reassess their businesses to cope with tougher capital rules, while some are cutting because of mergers.

Natixis will encourage some staff to take early retirement or jobs outside the company, the report said.

The negotiations with unions started in June and an internal meeting was scheduled for September 2 to discuss plans, the paper said.

Natixis in February said it would simplify its finances by offloading a 20 per cent stake in BPCE, the network of co-operative lenders that controls Natixis.