Mizuho Financial Group Inc. will become the first of Japan's three largest banks to launch an overseas team dedicated to commodities trading.
A four-member team in London will begin trading on European and U.S. markets as early as this month, Koji Onishi, head of the derivative business development team at Mizuho, Japan's second-largest bank by revenue, said in an interview in Tokyo.
Oil, copper, aluminum, corn and wheat have gained to records on rising demand, driving a 22 percent increase this year in the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials. The index Tuesday closed down 9.9 percent from its all-time high.
"With the market as active as right now, the commodity business is the area that should be strengthened," said Nana Otsuki, a Tokyo-based analyst at UBS AG. "This is an interesting business opportunity."
Mizuho already offers derivative products to mostly Japanese corporate clients to hedge commodity prices. The bank uses overseas futures markets to trade raw materials such as crude oil, copper, gold, platinum, corn and soybeans. Japanese banks are not permitted to trade commodities for immediate delivery.
Mizuho set up a team specializing in commodity sales in Singapore in April last year, moving to increase business with overseas customers. The bank plans to enhance its commodities operations by dividing functions among Tokyo, Singapore and London, Onishi said.