Rothschild enters “under-banked” oil risk sector

Rothschild has entered the oil risk management sector, offering over-the-counter risk management products worldwide across all oil commodities to oil producers, consumers and utilities.

Heading the senior team is Martin Fraenkel, previously managing director of JP Morgan Chase’s global commodities group in London. Fraenkel has recruited his senior team from outside Rothschild, with Kamal Murari, head of origination, previously of JP Morgan; Lars Bjerkan, senior marketer, from CSFB; Vincent Godier, head of trading, from Credit Lyonnais; and Franck-Eric Fischer, senior trader, from Société Générale. The team will share quant resources with Rothschild’s precious metals group, a business Fraenkel says is in decline.

Fraenkel believes the oil risk management sector is “under banked”, in that there are very few financial institutions offering specialist oil services. “If a customer wants to do an energy hedge, he will typically have to talk to the interest rate or FX desk at his bank - which may not have proven expertise in the energy area.”

He says customers will prefer to deal with banks, rather than pure energy companies, citing a “comfort factor” afforded by reputation, regulation and a strong balance sheet. The group aims to capitalise on Rothschild’s existing customers as well as seek new clients.

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