The Royal Bank of Scotland and Sempra Energy has completed the formation of a commodities-marketing joint venture known as RBS Sempra Commodities. The deal reflects the growing tendency for investors to put money in commodities, seen as a safer option than more risky asset classes more likely to suffer the ill-effects of the credit crunch.
"Formal completion of this joint venture gives access to a major new asset class for our corporate and institutional client base, further complementing our already extensive range of financial and risk management products,” comments Johnny Cameron, director of RBS.
He adds: “Market conditions over the past number of months illustrate the importance of diversified income streams, with commodities providing additional resilience in today's challenging markets.”
The joint venture was announced in July 2007, and under the terms of the agreement RBS Sempra Commodities purchased Sempra Commodities and it has become part of RBS's global banking & markets business.
RBS’s initial equity investment in RBS Sempra Commodities is US$1.7bn, and Sempra Energy’s initial investment in the joint venture is for US$1.6bn.
RBS is also providing any additional funding needed to support continuing operating expenses of the businesses.
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