The Royal Bank of Scotland, the fifth largest bank in the world by market capitalization, is looking to set up a credit derivatives operation in Asia in the coming months on the back of building up its fixed income and currency derivatives desk in Tokyo, according to Pierre Ferland, branch manager and treasurer in Tokyo. "RBS has a tremendous aspiration to be a global wholesale leader," said Ferland. He continued that the firm is looking to set up a credit derivatives structuring and trading operation in Asia, which will be headed out of Tokyo. "It's the only structured investment product that's missing," said Ferland, commenting on the bank's interest in credit. RBS will look to hire structurers and traders for the effort, though he declined to comment on the intended size of the desk. "We're currently looking at potential candidates," he said.
The bank has a strong chance of success in Asia as it has strong credit structuring expertise in London and a high credit rating, said Ferland. "We have the advantage of a AA plus rating from Moody's [Investors Service]." The bank will focus on credit derivatives structuring rather than becoming a major market maker in credit-default swaps, noted Ferland. RBS plans to structure such products as credit-linked notes and synthetic collateralized debt obligations.
"It's still a growing market, they should be able to carve out their own piece," said a credit head in Tokyo. Another credit head added that the success of RBS against more established players hinges on the talent they can attract. "If you have the right people and right distribution, anybody can be a major market player."
Additionally, the bank is building up its fixed-income and currency derivatives operation in Tokyo, as the dust has settled from its acquisition of NatWest in 2000. RBS has recently hired Takeshi Sato, foreign exchange options sales at Citibank in Tokyo, as a senior foreign exchange marketer and Mamoru Kubo, interest-rate derivatives marketer at Citibank as head of interest-rate derivatives marketing. Masashi Yamamoto, treasurer at Chinatrust Commercial Bank in Tokyo, will join the bank in June as a yen interest-rate swap trader, noted Ferland. Sato declined comment and Kubo did not return calls.
