Mitsubishi UFJ Securities to Withdraw From Commodities Business

Mitsubishi UFJ Securities International Plc plans to withdraw from its London-based commodities business amid tougher regulations and shrinking revenue, a company spokesman said.

The London-based unit of Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest bank by market value, won’t take new transactions, though it will continue to honor existing ones with customers, said Shingo Sumimoto. The unit is winding down operations for overseas commodities derivatives, he said by phone from Tokyo.

The bank joins JPMorgan Chase & Co. (JPM), Deutsche Bank AG (DBK) and Morgan Stanley (MS) in cutting back on commodities as regulators seek to toughen financial market rules and curb speculation. The world’s 10 biggest banks cut commodities units last year as revenue shrank and regulators expressed concern that the businesses could inflict losses. Staffing levels fell to the lowest level since at least 2009, according to analytics firm Coalition Ltd.

The London unit started trading crude oil derivatives in 1990 and later added base metals, oil products, coal, freight, carbon emissions and precious metals.

The parent group’s profit unexpectedly rose 5.5 percent in the three months ended Dec. 31 as lending income and gains in the value of its shareholdings outweighed a slump in bond trading, it said on Feb. 3.

JPMorgan entered exclusive talks to sell its physical commodities unit to Mercuria Energy Group Ltd. as the bank seeks to end a five-year foray into owning and storing materials such as metals and oil, according to two people briefed on the matter Feb. 5.

Deutsche Bank will exit dedicated energy, agriculture, dry bulk and base metals trading and transfer its financial derivatives and precious metals desks to the fixed income and currencies division, it said in December.

To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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