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Koch, Royal Bank of Canada Form Global Energy Alliance

Koch, Royal Bank of Canada Form Global Energy Alliance

Greater demand for energy derivative products on the world market prompted the Royal Bank of Canada to team up with Koch Industries last week. The powerhouse in the worldwide financial markets, which handles $30 billion/day in transactions, said the alliance will provide its clients with direct access to energy market data and trends, and a broader array of energy derivative products, such as weather derivatives.

The bank entered the commodity risk management business four years ago in a modest way and has been building slowly. The alliance, however, puts the bank's energy risk management program on the fast track.

"The depth of information you get from being allied with someone who is in the market is invaluable. We expect to be able to provide our clients with finer pricing without risk to ourselves because we're dealing with people who are right in the industry," said a Royal Bank spokesman.

Royal Bank Chairman John Cleghorn said, "[Koch] has an outstanding reputation and is a market leader in energy and weather derivative products. These strengths, when combined with our global foreign exchange operations, market analysis and financial engineering capabilities make for a strong, customer-focused partnership with a highly competitive product offering."

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

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

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