Sumitomo Mitsui Financial Group Inc. is in talks with Barclays PLC on an alliance to offer commodity derivatives for companies to hedge against rising raw materials costs, the bank's commodity chief said.
Sumitomo Mitsui, Japan's third-largest bank by market value, plans to sell products developed by London-based Barclays and to eventually offer customers more of its own commodity derivatives, Shinichi Fujita, head of the Sumitomo Mitsui Banking Corp. commodities group, said. Japanese banks are developing commodities as a business area alongside lending and foreign exchange after prices rose to all-time highs. The UBS Bloomberg Constant Maturity Commodity Index reached a record 1,723.109 on July 3 before dropping 16 percent to Thursday's close. Volatility on the index gained to 31 percent on Aug. 22, the highest in more than four months on a 30-day basis.
"Commodities are an important business, in spite of uncertainties in the outlook for prices," said Shinichi Ina, an analyst at Credit Suisse in Tokyo. "Banks will devote more resources to this field as corporate fee revenue drops."