Barclays partners with Chinese bank on commodities

UK bank Barclays and China Development Bank (CDB) have formed a commodities alliance with an initial focus on energy, metals and emissions. It will combine CDB’s market presence in China with Barclays' global commodities, risk management and banking know-how.

Barclays will help the Chinese bank to develop its commodity products origination and trading capabilities and enhance its commodities execution and risk management infrastructure. In exchange, CDB will use Barclays as its preferred provider of commodity risk hedging.

The initial term of the alliance is five years, with the option to extend for a further period agreed by both parties.

It follows similar partnerships struck in Asia between international and domestic banks, such as the one announced in June by Australia’s Macquarie Bank and Nomura in Japan, and the alliance that French bank Société Générale made with South Korea’s Kookmin Bank in October 2006.

The partnership is a critical part of CDB’s and Barclays’ expanding global strategic relationship, announced in July this year in connection with CDB becoming one of Barclays largest shareholders.

“Barclays is publicly recognised as one of the top three global commodity banks,” says CDB deputy governor Gao Jian. “China Development Bank is confident that Barclays is the right partner to ensure the long-term, successful development of CDB’s commodities business capabilities.”