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Commodity Returns for Banks Curbed by Regulation, McKinsey Says

Nov. 12 (Bloomberg) -- Commodities will become less profitable for banks because of tightening global regulation of capital markets, according to McKinsey & Co.

Return on equity in commodities is projected to drop to 8 percent from 20 percent, McKinsey said in its annual review of the banking industry last month.

“More complex and burdensome” rules will have a “significant” impact on banks, making it harder to raise capital and to support growth in lending, according to the e-mailed report. “Regulation will fundamentally deteriorate economics of capital markets products.”

To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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