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25 April 2017
INTERVIEW-Russia's VTB Capital boosts team of metals traders in Hong Kong

VTB Capital, the investment banking arm of Russia's second-biggest bank VTB <VTBR.MM>, said it plans to hire five metals traders for its Hong Kong office within the next two months as it boosts its commodity business.
The newcomers will include specialists in precious and base metals, iron ore and coal, and will increase VTB's commodities team to around 40 people, Atanas Djumaliev, head of global commodities at the firm, said.

Charles Smith is joining the firm's office in Hong Kong from Avra Commodities and will be in charge of base metals, Djumaliev said in an interview with Reuters. He did not disclose the names of the four others.

VTB is one of the biggest players in the Russian gold market alongside Sberbank <SBER.MM>, Russia's biggest lender.

Precious metals will remain the main asset class within VTB's commodities business, Djumaliev said, adding that the priority was also to develop the firm's presence in other gold-producing regions such as post-Soviet countries, the Middle East and Africa.

VTB Capital plans to supply at least 15-20 tonnes of gold to China in 2017, of which 6 tonnes have already been sent. The firm sold around 2 tonnes of gold to China in 2016.

In 2017, it plans to export at least 20 tonnes of gold to India, of which over 5 tonnes have already been sold, and also at least 300 tonnes of silver. In 2016, VTB Capital's gold sales to India totalled more than 12 tonnes, along with more than 200 tonnes of silver.

Its gold and silver come from Russian producers and refineries and from markets including London, Zurich and Dubai.

In the Russian market, the central bank, one of the world's largest holders of bullion, remains the biggest gold buyer and VTB's export potential depends on the central bank's appetite.

The central bank bought 200 tonnes of gold to add to its holdings last year, while the country, the world's third-largest gold producer, produced 288.6 tonnes of gold over the same period.

In aluminium, VTB cooperates, among others, with Russia's Rusal <0486.HK> and Eurasian Group's Aluminium of Kazakhstan. It also works with Greek industrial group Mytilineos's Aluminium of Greece, Djumaliev said.

"We signed a trade contract with Aluminium of Greece at the end of last year and are currently intermediating for them when it comes to physical metal deliveries for German clients," he said.

He added that VTB was also offering a range of financial and hedging instruments.

VTB Capital recently moved into agricultural commodities as Russia is one of the world's top wheat exporters, with customers mainly in North Africa and the Middle East.

Leading grain trader Hans Stoldt recently joined VTB Capital as its director of agricultural trade in Switzerland.
"So far, we have focused on financing grain production, storage and grains in transit. With Hans's arrival, we plan to start physical grain trading," Djumaliev said.

He sees opportunities in several commodity-linked financial services, including pre-payment for future crop production, exports via its Swiss branch, being a mediator for goods in transit, providing finance for companies that need to support their stockpile storage, along with derivatives and hedging.

VTB Capital expects its future clients to be grain producers and exporters in the Black Sea region of Russia and southeastern Europe, including Moldova, Bulgaria and Romania. 

Djumaliev also said VTB Capital's trading volumes had reached 10 million tonnes of oil and oil products per year and that it had signed a contract with a Chinese refinery to supply feedstock. 

Its oil team includes two traders, Maxim Alenov and Mohsin Kabir, hired in Switzerland in 2016, as well as Konstantin Polyansky and Olga Danilova in the Moscow team.

Corporate Communications VTB Capital