Demand for creditworthy counterparties and experienced risk management services, has prompted Deutsche Bank AG and Wachovia Corp. to enter the U.S. natural gas trading and risk management business. Deutsche Bank has hired a former El Paso Merchant Energy trading official and several additional gas trading professionals to anchor its operation.

Deutsche Bank announced Tuesday that Foster Smith, former senior vice president and head of derivatives trading at El Paso Merchant, has joined the firm’s commodities division as head of U.S. natural gas trading. He will oversee a group of three traders responsible for trading and risk management. Smith’s group forms part of the global energy trading team headed by Kevin Rodgers and located in New York.

“U.S. natural gas is a vital business within the commodities industry. Consequently, we have strengthened our team by hiring an outstanding trader with extensive industry expertise,” said Rodgers. “Foster has over 10 years experience in the gas business and has led one of the largest trading operations in the market.”

Prior to joining Deutsche Bank, Smith was the co-founder of Saxum Capital Group, designed to attract and manage alternative investment capital in energy trading.

Wachovia Corp. also is setting up an energy derivatives trading desk to deal in oil and natural gas markets. The Charlotte, NC-based bank, the fourth largest in the United States, confirmed news reports that it is in the process of hiring traders and expects to complete the process next month.

Major oil and gas producers, major banks and other creditworthy companies have been actively trying to fill the void left by the collapse of Enron Corp. and the exit from the trading business of many other major energy merchants over the past two years.

Wachovia is expected to operate only in derivatives, such as futures and swaps, rather than the physical markets. Deutsche Bank is expected to be actively involved in both the physical and financial side of the business.

Deutsche Bank has 67,700 employees and serves 13 million clients in 76 countries throughout the world. Wachovia has nearly 87,000 employees, $401 billion in assets and serves nine million households along the East Coast of the United States.

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