INTERVIEW-RWE trading unit expects to grow faster outside Europe

* Turned off by depressed market, ultra-keen EU regulation

* Managers seek half of profit from outside Europe in 5 years

* Asian and U.S. markets in focus

ESSEN, Germany Feb 13 (Reuters) - German utility RWE's trading subsidiary is seeking to expand in North American and Asian energy and commodities markets because of Europe's slow growth and increased regulation, a senior manager said.

Within five years, operating profit from overseas activities will account for 50 percent of RWE Supply & Trading's overall result, compared with 15 to 25 percent now, Peter Krembel, head of global power and gas trading and origination, said in an interview earlier this week.

"We want to safeguard our position in the European market, but the permanent changes of rules of play do not always make it easy," he said at the RWE headquarters in Essen.

"Outside Europe, markets are developing more dynamically. We go where there is more competition and more growth."

EU and U.S. regulators have been moving to improve transparency and raise capital requirements in the commodities and energy sectors as part of a trend toward tougher regulation after irregularities in the financial markets triggered a global financial crisis last decade.

To many in energy wholesaling, the new rules add to costs and eliminate arbitrage niche opportunities, especially for small players, and thus throttle Europe's still young industry, which has grown out of liberalisation 15 years ago.

Some banks such as Bank of America-Merrill Lynch and Deutsche Bank have pulled out of European power and gas trading.

"Our competitors apparently also have their difficulties with this situation," Krembel said. "This can be seen from the number of market exits and the declining liquidity."

The RWE trading unit which employs 1,500 people in locations including Essen, New York, London, Swindon, Geneva, Singapore, and Jakarta, posted operating profit of 903 million euros ($1.2 billion) for the nine months to September 2013, contributing about one fifth of the RWE group's earnings.

The business overcame 403 million of losses in the year-earlier period and is headed for a full-year profit, the group said last November. Full results for 2013 are due in March.

RWE is best known as a leading coal-fired electricity producer and, like other utilities, has been stung by Germany's renewable boom, which has weighed on prices.

The trading unit secures raw materials for the parent group and also earns revenue from its wider trading of coal, power, gas and carbon emissions rights.

"Fuels and power generation are our core business. That is why we aim to, and will, remain active in trading those commodities that we deem relevant," said Krembel.

Recently, RWE has been targeting opportunities in power markets in New Zealand, Singapore and Russia and in trading financial contracts in aluminium and copper, followed by zinc, nickel and lead.

Krembel said RWE also had positions in Australian power and was expecting that in the medium term, the country would become a big exporter of liquefied natural gas (LNG).

Last year, RWE Supply & Trading opened an office in Mumbai from where it expanded its coal business and also started trading in fertiliser.

"Price developments in metals represent an early indicator of the economic developments in different parts of the world," said Krembel, particularly mentioning China.

In the United States, where the economy is expanding thanks in part to a shale gas boom, RWE's power, gas and coal business is expanding, but much can be managed from the Essen headquarters, he said.

($1 = 0.7343 euros)

(editing by Jane Baird)