Greater demand for energy derivative products on the worldmarket prompted the Royal Bank of Canada to team up with KochIndustries last week. The powerhouse in the worldwide financialmarkets, which handles $30 billion/day in transactions, said thealliance will provide its clients with direct access to energymarket data and trends, and a broader array of energy derivativeproducts, such as weather derivatives.

The bank entered the commodity risk management business fouryears ago in a modest way and has been building slowly. Thealliance, however, puts the bank’s energy risk management programon the fast track.

“The depth of information you get from being allied with someonewho is in the market is invaluable. We expect to be able to provideour clients with finer pricing without risk to ourselves becausewe’re dealing with people who are right in the industry,” said aRoyal Bank spokesman.

Royal Bank Chairman John Cleghorn said, “[Koch] has anoutstanding reputation and is a market leader in energy and weatherderivative products. These strengths, when combined with our globalforeign exchange operations, market analysis and financialengineering capabilities make for a strong, customer-focusedpartnership with a highly competitive product offering.”

The deal gives Koch a connection to a worldwide collection ofinvestment clientele. Royal Bank and its subsidiaries serve 10million clients through more than 1,500 branches and officeslocated in 36 countries.

A Koch spokeswoman added the two firms also plan to jointlyproduce daily energy market commentary and organize an annualenergy conference. Rocco Canonica

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