Commodity markets and ABN AMRO

This means the bank does not act for its own account and does not take positions for its own benefit or speculation. ABN AMRO is involved in commodity markets in three ways. The commodity markets themselves are generally not involved in speculation. Speculative activities are just a small part of this market. ABN AMRO is not involved in this part.

Zembla’s broadcast discusses several banking activities: Clearing, Energy Commodities & Transportation and turbos. The bank gives details of these activities below.

Clearing Clearing & Settlement is about guaranteeing and processing securities and derivatives transactions. Clearing does not involve speculative activities. Clearing transactions reduce the counterparty risk for the investor as much as possible. As such it deals with risk management for clients. Clients of ABN AMRO Clearing are generally market makers in financial products. The ABN AMRO office in Chicago does serve clients who physically produce commodities,on a limited scale. These clients use futures contracts to hedge price risks.

Energy Commodities and Transportation ABN AMRO’s Energy Commodities and Transportation (ECT) offers clients mostly trade and project financing. This means ABN AMRO grants loans so that clients (in the case of Commodities) can physically transport commodities from A to B or to finance physical commodities. Financial risk management for clients is a key part of the bank’s service. The commodity trading is carried out on exchanges. ABN AMRO does not act as a counterparty in this.

Turbos The turbo is an important investment product used to anticipate price movements and have a so-called leverage effect. ABN AMRO offers 34 turbo products with an underlying relationship with commodities. This is a relatively low number compared with the total range of 985 turbos. These 34 turbos constitute a total value of less than € 500,000 in turbo investments.That represents less than 1% of ABN AMRO’s total investments in turbos. Not only is it impossible to influence the price of underlying commodities through turbos, a value of less than € 500,000 – in a total commodity market worth thousands of billions of euros – gives an indication of ABN AMRO’s very limited position in this market.

Zembla ABN AMRO fully cooperated with Zembla and has been completely transparent about its activities on the agricultural and other commodity markets. The bank regrets the lack of attention in the programme for the facts and figures they shared with Zembla’s editorial staff.

Do you want to know more about the commodity markets?Newspaper NRC Handelsblad published an extensive article about this on 24 December. ABN AMRO believes this article paints a more accurate and factual picture of the commodity markets and the role speculation plays.