Big banks' nine-month commodities revenue drops 18 pct - report

Thu Nov 14, 2013 5:06am EST

* Cites poor performance in investor products, power and gas

* Full-year commodities revenue seen down 14 pct

* Says inventory financing remains robust

LONDON, Nov 14 (Reuters) - Commodities revenue slid by 18 percent in the first nine months of the year at the top 10 investment banks, partly because of poor performance in investor products and power and gas, a consultancy said on Thursday.

Many banks have reduced their commodities business, hit by increasing regulation and higher capital requirements after the global financial crisis.

Revenue from commodities for top banks fell to $4 billion during the first three quarters of 2013, down from $4.9 billion in the same period last year, London-based financial industry analytics firm Coalition said in a report.

Full-year commodity revenues are forecast to decline by 14 percent to $4.7 billion, it added.

Poor performance in investor products and power and gas continued into the third quarter of 2013 while oil revenues were in line with the first half of the year and metals remained stable, Coalition said.

"Across commodities products, however, inventory financing activities were more robust."

Deutsche Bank told Reuters last month that inventory financing in Asia was growing at 10-20 percent a year and has expanded into a business where up to $20 billion of short-dated deals are in place at any one time.

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 in the first nine months dropped by 19 percent to $60 billion and the full-year figure is expected to come in at $73.6 billion, down 20 percent, Coalition said.

Last year investment bank Goldman Sachs took the top spot for commodities revenue, followed by JPMorgan Chase and Morgan Stanley, Coalition said in March.

The other banks Coalition tracks are: Bank of America Merrill Lynch, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank and UBS .

The 19-commodity Thomson Reuters-Jefferies CRB index has shed 7.3 percent so far this year.