Sberbank announces that it has created a subsidiary named SB Commodity Trading LLC, and completed its first physical commodity purchase and sale transaction on the domestic market involving the provision of financing for oil companies and refineries.
The new subsidiary has been created to carry out pre- and post-payment of deliveries of oil, gas, and petroleum products to producers, oil refineries, and commodity traders against future deliveries of oil and oil products to end users.
This new product enables working capital to be generated prior to the beginning of production. Prepayment through purchase and sales contracts provides commodity producers and refiners with an additional source of liquidity, but does not possess the parameters of a debt instrument. Deals can be entered into at floating or fixed prices.
Andrey Shemetov, Head of Global Markets at Sberbank CIB, Managing Director, commented: “Sberbank is taking significant steps to expand its presence on commodity markets. We are one of the largest operators on the Russian precious metals market and successfully trade on the markets of China, India, and the Middle East. The opening of a new subsidiary is the latest in a number of moves in this area and is vital to increasing the scale of our commodity operations.”
A major oil producer and independent oil refiner participated in SB Commodity Trading LLC’s pilot transaction on the domestic market. Under the transaction, financing was provided for prepayment of oil deliveries totalling 30,000 to 60,000 tonnes per month. SB Commodity Trading LLC plans to enter into a number of deals to supply oil, gas, petroleum products, and other commodities.
Sberbank CIB1 is the corporate and investment banking business of Sberbank. Its key areas of activity are corporate finance (including trade finance), the documentary business2, investment banking services, trade operations with securities, and private equity. Sberbank’s corporate and investment banking business provides integrated financial solutions and investment advisory services to its clients, which include major corporations, financial institutions, sovereign states and federal and sub-federal government bodies and organisations.