* Bank 2012 commodity revenue estimated at $6 bln
* Hit by lower volatility, reduced client activity
* Heavier regulation, capital requirements also factors
LONDON, Feb 14 Investment bank revenue from
commodities trading dropped by about a quarter last year due to
lower volatility and lacklustre client business, financial
sector consultant Coalition said.
Turnover in commodities was also affected due to stiffer
regulation and more rigorous capital requirements, Coalition
said in a report on overall performance by the world's 10
biggest investment banks.
Commodity revenue from the top investment banks fell to
about $6 billion in 2012 from about $8 billion the previous
year, Coalition said in the report released on Thursday. Banks
do not break out revenue from commodities when reporting
"Low volatility and reduced client activity led to a 24 per
cent drop in revenues. Energy, investor products and precious
metals options businesses were notably affected," the report
"Performance was also subdued by ongoing concerns about
increased regulation and capital sensitivity, pushing banks to
re-evaluate their commodities strategies."
When Morgan Stanley reported last month, it said that
its fourth-quarter commodities results were the worst since
1995. In the same week Goldman Sachs said its commodity
results were "significantly lower".
Another consultant, Tricumen, said earlier this month that
commodities revenue at top U.S. banks tumbled by a third in the
U.S. banks have had to shrink operations to comply with
tighter bank regulation since the 2008 financial crisis. This
includes the Volcker rule banning banks from proprietary trading
- when deals are done by banks for themselves rather than on
behalf of clients.
The other eight banks that Coalition tracks are Bank of
America/Merrill Lynch, Barclays, Citigroup
, Credit Suisse, Deutsche Bank, JP
Morgan, RBS and UBS.