July 1 Citigroup Inc has bought Deutsche
Bank AG's U.S. power trading books, the latest move
by the U.S. bank to build its energy trading business as other
Wall Street rivals retreat, two sources said on Tuesday.
The sources said Deutsche sold two power trading books to
Citi last week covering the ERCOT region in Texas and the East
Citi has been building its commodities trading operations,
which focus on power and natural gas, after scaling back its
exposure to energy, metals and agricultural markets following a
government bailout during the world economic crisis in the late
Citi's revenue from commodities transactions nearly doubled
in the first quarter of 2014 year-over-year.
Last year, Citi was No. 10 among the world's top 10
investment banks in commodities according to British consulting
firm Coalition. In May, Reuters reported the bank will start
trading physical Canadian crude oil and plans to grow its
commodities trade finance business.
Deutsche, Germany's largest bank which was one of the
top-five financial players in commodities, said in December it
will cease trading in energy, agriculture, base metals, coal and
iron ore, retaining only precious metals and a limited number of
financial derivatives traders, due to toughening regulations and
The Deutsche sale to Citi as part of the closure of its
energy trading business was first reported by trade journal
Officials at Deutsche and Citi declined comment.
Since the financial crisis of the late 2000s, several banks
like Deutsche have scaled back their exposure to U.S. power
markets due in part to increased government regulation and
market manipulation investigations.
In January 2013, Deutsche settled with the U.S. Federal
Energy Regulatory Commission (FERC) for $1.7 million over
allegations the bank's traders manipulated the California power
Earlier this year, Deutsche initiated a sale of 17 books of
commodities trading positions, including crude and refined
products structured transactions; dry bulks; and mining finance,
according to a marketing document, according to SparkSpread.
Deutsche recently sold its European power & gas trading
books to EDF Trading, a unit of Electricite de France SA
, SparkSpread said earlier in June.
(Reporting by Scott DiSavino and Anna Sussman in New York;
Editing by Marguerita Choy)