Europe’s banks reviewing commodity financing

ABN Amro Bank NV announced it would quit commodity trade finance. BNP Paribas SA is reviewing its involvement and may shut down its specialised unit, Bloomberg reported earlier this month. Rabobank Group is also reviewing the business

AMSTERDAM: When Marc Rich needed US$100mil to buy Iranian oil and kickstart what would become the world’s largest commodity trader, he went to French bank Paribas. When a group of traders needed cash to take over Vitol and turn it into the largest oil trader, they turned to Dutch bank ABN.

For the past half century, a small group of European banks has financed the trade in natural resources, forging a symbiotic relationship with the commodity traders that put them at the heart of an enormous expansion in global commerce.