Martin Kreuzberg, you are Managing Director of the partnership with EDF Trading. Can you let us know more about the purpose of this partnership?

The partnership with EDF Trading will strengthen Calyon’s position in the top rank of banks that provide financial services to the energy sector, by broadening its product range in commodities. More specifically, we are developing a new activity in trading physical and financial European power, gas and global financial coal alongside the existing commodities business in Calyon. The physical settled activity is of critical importance in this field to ensure the highest execution standards for clients. However, it also requires very specific expertise that is not normally present in banks. This is why Calyon has chosen to develop this business together with EDF Trading, a recognised market leader in trading energy. The two parties have decided to pool their complementary resources, to develop business that would be impossible to achieve on a standalone basis. The business will be based at Calyon in London within the Fixed Income Markets (FIM) Commodities unit and will operate under the Calyon name.

What are the types of activities that the joint venture aims at developing?

Thanks to the joint venture, Calyon will be able to offer hedging products for European electricity, gas and global coal markets, ranging from plain vanilla to structured products. Given the position Calyon has established with its corporate coverage and structured finance businesses in the energy sector, we see significant cross-selling opportunities with the Bank’s existing client base. Calyon has significant balance sheet commitments through its financing and fixed income markets activity to the energy intensive industry and energy producers, however to date could only offer limited services to hedge its clients’ financial risks related to energy. The business that is conducted under the partnership arrangement with EDF Trading will close this gap and complement Calyon’s existing product offering.

What are the significant steps in the setting up of the joint venture?

The agreement between Calyon and EDF Trading was signed on May 13, 2009. As of this week we are ready to trade products in financial coal, and we will add capability in financial power and gas in November 2009. Towards the end of the first quarter of 2010 we will add physical trading capability in power and gas.

"Calyon has been a leading player in the commodities sector for over 20 years. We are especially active in the energy and metals markets, where we are seen as a market maker.
We have 65 professionals dedicated to trading, sales, structuring and research, with operations in six major financial centers:  London, New York, Paris, Hong Kong, Geneva, and Houston.

Since 2004, the commodities markets have been in a structural bull market which has led to many client opportunities. We continued and continue now to pursue the development of our client portfolio and our international activity. We anticipate a new phase of growth in China, a key market for commodities, where Calyon recently obtained a banking license.  First we have to gain the necessary permissions from the Chinese authorities to trade commodities onshore.

Today our expertise has already been strengthened in our existing trading platforms for oil, base and precious metals and agricultural commodities.  We have reestablished an Emissions trading platform so clients can manage their carbon exposure worldwide.

Now we will grow further by our partnership with EDF Trading, which will enable us to offer our clients hedging solutions for their electricity and gas exposure in Europe and their coal exposure worldwide. In addition, the Global Energy Group division will enable us to develop cross selling and to consolidate our relations with the Senior Bankers in the area of energy."