Goldman Still Top for Commodities During Dire Year for Banks

  • JPMorgan and Citigroup were 2nd by revenue in 2015: Coalition
  • Banks' revenue from commodities dropped 18 percent last year

Goldman Sachs Group Inc. remained the largest bank by commodities revenue in 2015 in what was one of the worst years for investment firms in at least a decade.

The New York-based company made the most money from raw materials among the top 12 investment banks for a second consecutive year, according to a report published Thursday by Coalition, a London-based business analytics firm. JPMorgan Chase & Co. and Citigroup Inc. were joint second.

Banks scaled down or abandoned their commodities businesses in the past few years amid increased regulatory scrutiny and reduced investment by hedge funds and other large traders. Banks’ combined revenue from raw materials sank 18 percent to $4.6 billion last year, the lowest in more than a decade, and down about two-thirds from the banks’ moneymaking peak in 2008, Coalition said in February.

Losses from poor performance and investor withdrawals left assets at the top 10 commodities hedge funds, which are customers of banks, at less than $10 billion, compared with more than $50 billion in 2008, trader Trafigura Group Pte. said in December. U.S. curbs on proprietary trading mean banks can’t fully take advantage of market fluctuations and hold their own positions.

Pulling Back

Credit Suisse Group AG, Deutsche Bank AG and Barclays Plc are among those that have scaled back trading activity, while Morgan Stanley cut most of its industrial-metals trading business at the end of last year.

The Bloomberg Commodity Index, a measure of investor returns from 22 raw materials, slumped 25 percent last year, the most since the financial crisis in 2008, as China’s economic slowdown curbed demand and exacerbated supply gluts.

Production cutbacks by mining companies including Glencore Plc have helped commodities to rebound, with the Bloomberg gauge touching a three-month high last week. Prices are up 4 percent in March, set for the first monthly increase since June.

Bank of America Merrill Lynch, Morgan Stanley and BNP Paribas SA came fourth to sixth in 2015, Coalition said. Barclays, HSBC Holdings Plc and Societe Generale SA came seventh to ninth. The company tracks commodities activities including power and gas, oil, metals, coal and agriculture.

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