European banks 'trying to resolve commodities crunch'

21 March 2012

Banks across Europe are making preparations to create a new programme in order to try to resolve the ongoing problems in the continent's commodities sector.

According to the Financial Times, lenders - including the major French firms BNP Paribas and Societe Generale - are currently attempting to come up with a new type of securitised vehicle that will bundle together commodity trading houses.

Executives from the firms told the news source they hope to be able to launch this product by the end of 2012 after going through the process of gauging the level of appetite from insurance companies and pension funds across Europe.

Jacques-Olivier Thomann, head of commodity trade finance at BNP Paribas, told the news source his bank "has no choice" but to be involved in this process because of financial pressures.

"Our balance sheet cannot move up at the same pace as commodities prices continue to increase," he stated.

By Tony Aynsley

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