THIN margins, tough regulations and worries about reputation make trading commodities look like a source of worries not profits for nervous bank bosses. Barclays, one of the biggest in the business, is the latest to head for the exit. This week it announced it would give up most of its metal, crop and energy trading.Barclays is following JPMorgan Chase, which last month sold its physical commodities division to Mercuria, a private trading firm based in Switzerland, and South Africa’s Standard Bank, which sold its commodities unit in London to Industrial and Commercial Bank of China in January. Morgan Stanley sold its physical oil-trading division to Rosneft, a Russian oil giant, in December, just as Deutsche Bank said it would stop trading most raw materials. Earlier last year UBS decided to shrink its commodities business sharply.Others, notably Goldman Sachs, are staying firmly in the business and most banks are still buying and selling for their clients. But returns are weak. Commodity-trading revenue for the ten biggest banks was $4.5 billion last year, down from more than $14 billion in 2008, according to...
from The Economist: Finance and economics http://ift.tt/1jV6isI
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