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Major banks’ commodities revenue slid 18 pct in 2013 -report

LONDON, Feb 18 (Reuters) – Commodities revenue at the top 10 investment banks dropped 18 percent in 2013 in a third year of declines due to weak investor interest and low volatility, a consultancy said on Tuesday.

Revenue from commodities for top banks fell to $4.5 billion last year from $5.5 billion the previous year, London-based financial industry analytics firm Coalition said in a report.

Many banks have slashed their commodities businesses and others have completely shut down commodities units, which also have been hit by tougher regulation and higher capital requirements after the global financial crisis.

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JP Morgan Chase is in the process of selling its physical commodities unit, and Deutsche Bank said last year it was largely exiting commodities trading.

The banks’ 2013 commodities revenue is less than a third of the $14.1 billion they racked up in 2008 at the height of the commodities boom.

“Revenues continued to decline, affected by a depressed client environment and low volatility. In 4Q 13, performance in U.S. power and gas was particularly weak,” the report said.

Wall Street investment banks typically do not break down their commodity revenue, preferring to cite it as part of the broader fixed income, currency and commodities category (FICC).

Overall FICC revenues last year slid by 19 percent to $73.9 billion, Coalition said.

Coalition tracks the following banks: Bank of America Merrill Lynch, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS .

The 19-commodity Thomson Reuters/Core Commodity CRB index shed 5 percent last year but is up 4.7 percent so far this year.