| NEW YORK, July 3
NEW YORK, July 3 Morgan Stanley has
bought Deutsche Bank's bulk commodities trading book dealing in
coal, iron ore and freight forward contracts to expand in
commodities derivatives, a source familiar with the matter said
The deal marks an apparent return to iron ore for the Wall
Street bank, which exited the market by last year, and an
expansion in coal and freight.
The acquisition will broaden Morgan Stanley's customer base,
making it the counterparty for structured transactions with a
wide range of end-users.
Expansion of its derivatives presence comes at a critical
time for the bank, whose physical business has drawn intense
scrutiny from U.S. regulators and politicians concerned about
the involvement of Wall Street banks in physical commodity
Facing growing pressure and tighter regulations, the bank is
offloading its interest in Transmontaigne, a U.S.-based oil
storage and transport company, and selling its physical oil
business to Russian gas producer Rosneft.
The size of the book is not known, although Deutsche was one
of the pioneers of iron ore swaps trading in 2008.
Spot trading in iron ore, the world's most traded commodity
by volume after oil, and in coal have ballooned in recent years
and both are closely linked to the dry freight sector.
The bulk commodities book is one of 17 put up for sale by
Deutsche, Germany's largest bank and one of the top-five
financial participants in commodities, as part of its decision
to exit commodities trading because of toughening regulations
and diminished profits.
Citigroup bought the German bank's U.S. power trading
books, and EDF Trading purchased its European power
and gas books.
The sale was first reported by financial industry
newsletter SparkSpread. The transaction occurred last week, it
(Reporting by Anna Louie Sussman; Editing by Steve Orlofsky)