FACTBOX-Investment banks in energy/commodity markets
(Adds Societe Generale)
Oct 3 (Reuters) - Swiss bank UBS (UBSN.VX) has closed the bulk of its global commodities business as part of cutbacks to try to recover from the credit crisis. [ID:nL3249694]
UBS, which began a big expansion in commodities in 2005, is the latest investment bank to pull back and may not be the last.
The top three players in energy and commodities are Goldman Sachs (GS.N), Morgan Stanley (MS.N) and Barclays Capital (BARC.L), the investment bank arm of UK bank Barclays Plc, according to senior executives in the industry.
Goldman Sachs and Morgan Stanley, once know as the "Wall Street refiners", have been active for two decades, Barclays Capital has built its business over the past 10 years.
Banks are active in derivatives, while some are also present in the physical oil markets, partly to gain access to information, but also to satisfy client needs.
Morgan Stanley, Barclays Capital and also Merrill Lynch MER.N have a physical market presence.
French banks Societe Generale (SOGN.PA) and BNP Paribas (BNPP.PA) both have longstanding activities in commodities.
The following lists recent moves by some banks in the commodities sphere:
BARCLAYS CAPITAL - The investment bank arm of the UK banking group said in June it planned around a 30 percent increase in staff in its commodities business in the next two years.
Then it had around 250 staff in energy and other commodities, spanning oil and refined products, metals, power and gas, coal, agriculturals, emissions and investment products.
It has just agreed to buy Lehman Brothers' North American investment banking business for about $1.75 billion.
CITI (C.N) - The U.S. bank began building up commodities in Europe in the last two years.
Its emphasis has been on newer markets such as freight, power and gas, carbon emissions and coal, but the firm also has activities in oil, precious and base metals and agricultural markets.
DEUTSCHE BANK (DBKGn.DE) began expanding its commodities business in late 2006 and has been adding staff and entering more markets, including carbon emissions, gas storage and transportation.
GOLDMAN SACHS - A spokesman for the firm has said that the firm's new status as a commercial bank regulated by the U.S. Federal Reserve would not affect its commitment to its commodity and energy business.
J.P. MORGAN CHASE (JPM.N) has expanded in energy and commodities trading. The U.S. bank added 50 people to its commodities and energy trading and investment team last year and had plans to hire a similar number this year. [ID:nSP148501]
The firm was taking on staff from the energy business of Bear Stearns, the U.S. investment bank it is in the process of taking over.
LEHMAN BROTHERS - The U.S. bank LEH.N, which has filed for bankruptcy protection, was one of the newer entrants into global commodity and energy markets.
It had begun expanding into energy and metals but was not ranked among the biggest market participants.
Barclays Plc has agreed to buy Lehman Brothers North American investment banking and capital markets businesses, which includes commodities.
French utility EDF (EDF.PA) has agreed to buy Lehman's Eagle Energy Partners, a wholesale energy transportation, gas storage and services business.
MERRILL LYNCH MER.N, which Bank of America (BAC.N) has agreed to buy in a $50 billion deal, also has a sizeable global commodities group, which expanded when Merrill bought the energy trading businesses of U.S. energy firm Entergy-Koch in 2004.
Merrill began trading physical crude oil and certain oil products in Europe earlier this year.
Bank of America early this year had shut its own commodities and energy trading desk in London, becoming one of the first big banks to cut back.
MORGAN STANLEY (MS.N) - Morgan Stanley has said it will apply to the U.S. Federal Reserve for permission to continue to own and operate its commodities business, now it has converted to a commercial bank.
The company, formerly an investment bank, has a grace period of 2-5 years during which it will be exempt from any commercial bank regulations that could restrict these activities.
Morgan Stanley and Goldman Sachs (GS.N) agreed to be regulated by the Fed as bank holding companies or commercial banks to try to restore confidence in the financial sector.
The Fed has previously allowed other bank holding companies to engage in a wide range of commodities activities.
Morgan Stanley, with about 370 staff in commodities and energy, has a significant presence in the physical oil business.
It owns U.S. fuel distribution company Transmontaigne Inc and Heidmar Inc, a ship management company. It also has tankers on charter around the world and an agreement to supply crude oil to European oil refiner Ineos.
SOCIETE GENERALE (SOGN.PA) - The French bank has 20 years experience in commodities, trading and marketing physical and derivative products.
It is maintaining its presence in base and precious metals, oil and oil products, and plastics. It trades coal, gas and power through its subsidiary Gaselys, a subsidiary of SocGen and Gaz de France. It trades emissions through its subsidiary Orbeo, a joint venture between chemical company Rhodia (RHA.PA) and SocGen.
The bank offers price risk hedging services to industrial clients, as well as investment products.
STANDARD CHARTERED (STAN.L) - The Asian-focused bank said earlier this month it would keep expanding its commodity and energy trading operations despite the credit crisis.
The bank has a global team in commodities and energy of 40 people covering energy, base and precious metals and agriculturals.
It has just hired Arun Murthy, former Asian head of Lehman Brothers' commodities team in Singapore as its new global head of energy. [nSP22698]
(Editing by Anthony Barker)
