GENEVA (Reuters) - Swiss bank UBS UBSN.VX, which has made deep cuts in its investment banking arm, is expanding in commodity trade finance by hiring 10 bankers in Geneva since the start of the year, a director said on Thursday.
In October, the Zurich-based bank said it would let 10,000 staff go as it withdraws from large parts of fixed income, due to stricter capital rules that make it harder to turn a profit from riskier activities such as trading.
By contrast, its presence in the relatively low-risk, low-return business of short-term loans to commodity traders to store metals and ship crude oil across the world is growing.
“UBS has decided to downgrade its investment banking and that gives the opportunity to our department and we have been hiring a lot of people,” Albert Steiger, director of commodity trade finance at UBS, said on the sidelines of the Marine Money Geneva Forum.
A spokesperson for the bank later added that the cuts in investment banking and the expansion of the commodity trade finance business were unrelated.
Asked why the bank was willing to allocate more resources to commodities lending, Steiger told Reuters: “It’s less capital intensive and the loans are short term. We have a management commitment to increase our activity.”
The new hires will be based in Switzerland which annually accounts for around 1.5 trillion Swiss Francs ($1.59 trillion) of commodity trade finance volume, according to the Swiss Bankers Association.
Steiger did not give further details on the UBS hires or the size of the business.
Many banks with exposure to the euro zone debt crisis have cut their commodity trade finance teams although some are now trying to claw back a share of the market.
But they are facing stiff competition from Asian and U.S. lenders who moved in to fill the gap left by banks like BNP Paribas BNPP.PA and Societe Generale SOGN.PA.
($1 = 0.9424 Swiss francs)
Reporting by Emma Farge, editing by Jeff Coelho and Elaine Hardcastle