Laura MacInnis / Reuters
GENEVA - A small Swiss city best known as a centre of diplomacy and banking has quietly transformed itself into a global commodities hub.
Low tax rates have compelled many trading houses to move to Geneva, the home of the United Nations’ European headquarters, the World Trade Organisation, the International Red Cross, and 140 banks catering to some of the world’s wealthiest people.
The Geneva branches of BNP Paribas, Credit Suisse, ING, Credit Agricole, UBS and other banks have also created a niche by offering transactional financing tools for physical commodities markets.
“That has attracted many traders from London, from Paris, and from elsewhere who are looking to get their operations financed,” said Geert Descheemaeker, head of the Geneva Trading and Shipping Association (GTSA).
His organisation, set up in September 2006, represents companies including Cargill, Louis Dreyfus Commodities Switzerland, Bunge Europe, Vitol and SGS.
The GTSA estimates there are 6,000 people working in commodities trading, shipping, and related services in Geneva, compared to the city’s 8,500 U.N. staff and 19,000 bankers.
Most are involved in physical commodities trading, not futures or hedging. All the major traders of grains, oil seeds and related products are in Geneva, which is the world’s top hub for this activity, Descheemaeker said.
Geneva’s longstanding ties to Russian business have also built up its oil trading activity, which Descheemaeker described as on par in influence with London and Singapore.