(Adds MOVES tag in headline; also repeats to additional Reuters
* Vlad Stoychev to head Citigroup global iron ore and coal
* Citi sees rivals fade, looks to cash in on bulks
By Maytaal Angel and Silvia Antonioli
LONDON, July 29 Citigroup Inc has hired a
physical iron ore trader from Deutsche Bank to head
its global bulk commodity sales team, as the U.S. bank looks to
capitalise on rivals quitting the sector and increased market
Vlad Stoychev, who started on July 14, will be tasked with
attracting physical iron ore and coal clients to Citigroup, a
spokeswoman for the bank told Reuters.
The move comes as commodity behemoths Credit Suisse
, Deutsche Bank, Barclays, and JPMorgan
leave the business due to unprecedented regulatory
scrutiny and diminished margins.
Citigroup's revenue from commodities transactions nearly
doubled in the first quarter of 2014 year-over-year, coming in
at $224 million and just $43 million shy of its total
commodities trading haul for all of 2013.
"Some banks are getting into iron ore because volatility is
high in bulk commodities so there's more clients, more
opportunities for prop traders outside banks, and that gives
banks some client flow business to execute," said an industry
Prices for iron ore .IO62-CNI=SI have dropped around 30
percent this year, while thermal coal prices have
either risen or fallen by 5-10 percent almost every month this
year, offering increased profit potential for banks.
At the same time the iron ore derivatives market is
continuing to mature, meaning banks can offer more services to
both physical and financial clients looking for exposure to the
world's no. 2 traded commodity after oil.
Singapore Exchange (SGX), which clears more than 90 percent
of globally traded iron ore swaps, said the total volume of
trade in iron ore swaps, futures and options reached 205.4
million tonnes from January to May, up 113 percent from a year
Citigroup scaled back its exposure to energy, metals and
agricultural markets following the 2008 financial crisis, but
has been rebuilding its commodities operations over the last
Citi joins Goldman Sachs and Morgan Stanley as
the last of the big banks standing in commodities, but will face
competition from smaller rivals like BTG Pactual, Standard Bank
, Macquarie and ANZ.
(Editing by David Evans)