BNP Paribas to halt commodity trade financing from Geneva

23 Sep 2020 | Rei Geyssens

The France-headquartered international banking group BNP Paribas announced on Wednesday that it will end operations at its Geneva-based commodity trade financing desk just weeks after the closure of its Paris desk in August. 

The move is part of the ongoing fallout after the bank racked up several large losses in its lending unit this year and is part of a wider move in the banking sector.

Several other large banks have announced they are pulling out of commodity trade financing as they look to reduce their risk levels after the onset of the Covid-19 pandemic.

“BNP Paribas (Suisse) SA is refocusing its development on Corporate & Institutional Banking and on Wealth Management. BNP Paribas (Suisse) SA has decided to end its transactional financing activity in the commodities sector,” the bank said via a press release on Wednesday.

It added that the move would affect up to 120 of its Geneva-based employees and launched an internal consultation period in a bid to mitigate the effects of the plan.

With banks shuttering their commodity finance desks, grain and oilseed merchants could face a tougher environment to source finance required for their capital-intensive trading operations.

At the same time, the bank will further develop its Global Banking, Global Markets and Securities Services operations in its Corporate & Institutional and Wealth Management sectors.

BNP Paribas has been hit this year after several commodity trade houses, such as Dubai-based Phoenix Commodities and US-based Coex Coffee, made unforeseen losses.

Last month, Dutch bank ABN Amro announced it will stop providing trade and commodity finance after a review by the CEO in a bid to lower its risk.