***UPDATE: Glencore, Credit Suisse terminate trading alliance

Glencore International and Credit Suisse have agreed to terminate their strategic alliance and replace it with a licensing and consultancy deal, Glencore told MB

Glencore International and Credit Suisse have agreed to terminate their strategic alliance and replace it with a licensing and consultancy deal, Glencore told MB.

“Credit Suisse and Glencore can confirm they have agreed to replace their existing alliance with a new, multi-year licensing and consulting agreement with regard to Credit Suisse’s commodities business,” a spokesman for the Swiss trading house said.

The companies formed the alliance in August 2006, creating a derivatives and structured products trading business for both base and precious metals based at Glencore’s offices in Baar and Credit Suisse’s offices in Zurich.

The joint venture enabled Credit Suisse to rapidly accelerate its commodities division while allowing Glencore access to Credit Suisse’s structured products and derivatives business.

One source said that the termination of the alliance may have been prompted by Credit Suisse building up its own metals trading team.

“Credit Suisse were very close to Glencore, but then they built up their own metals team so there may have been some conflict of interest,” he said. “Either you go completely exclusive or you don’t.”

The source added that this was a question arising from when the original alliance was signed.

“Back in 2006 people were wondering why a bank would tie up with such a company when it was also doing business with others,” he said. “That closeness to Glencore is not an advantage if you want to do outside business.”

A broker told MB that, since the alliance was signed in 2006, he had become wary of speaking to Credit Suisse employees because of the association with Glencore.

“I’m not sure how well the deal worked in reality. Every time someone from Credit Suisse called I assumed that Glencore was behind it,” he said.

In January 2007, Credit Suisse hired Adam Knight, then head of metals trading at Goldman Sachs, to head the invigorated commodities business following the signing of the Glencore alliance six months previously.

With the termination of the alliance, Knight has now left the bank. But it is not a severance of all ties between the two companies. Credit Suisse will continue to work with Glencore on joint initiatives, such as the Credit Suisse Glencore active index strategy (Gains) index.

In June 2009, the bank and the trading house launched the index to enables investors to gain access to Glencore traders’ views of how commodities prices will move. The index follows about 20 commodity prices, including exchange-traded metals copper, aluminium, lead, zinc and nickel but not tin.

“We look forward to continuing to work with Glencore in the future,” a spokesman for Credit Suisse said.

What to read next
Fastmarkets has decided to proceed with the launch of a new European low carbon ferro-chrome price covering material with lower chrome content.
Fastmarkets invites feedback on a proposal to increase the publication frequency of non-exchange-deliverable equivalent-grade (EQ) copper cathode premium, cif Shanghai, from once every two weeks to once every week.
The outlook for North American steel scrap prices has headed further into bearish territory ahead of June’s trade, with prices for all grades expected to fall again after a round of across-the-board decreases in May
Fastmarkets is inviting feedback on a change of publishing time for our ferro-chrome price in the Chinese domestic market as well as ferro-chrome import prices in Japan and South Korea, to 5-6pm Shanghai time from 2-3pm London time.
Fastmarkets is inviting feedback on a proposal change the publishing time for our silico-manganese, ferro-manganese and manganese ore port prices in China, to 5-6pm Shanghai time from 2-3pm London time.
The publication of Fastmarkets copper concentrates TC index, cif Asia Pacific was delayed on Friday March 26, due to a reporter error.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.