Nordea Limits Commodities Trading as Profit Review Nears Its EndNiklas Magnusson
Nordea Bank AB has reduced trading at its commodities unit as the Nordic region’s largest bank nears the completion of a review of the business.
“We have limited our trading as part of the review we have communicated earlier,” Erik Durhan, a spokesman for Nordea in Stockholm, said in an e-mailed reply to questions regarding the unit yesterday. “It will be completed within a few weeks and will decide what direction we will have in the future.”
Nordea is considering closing its global commodity unit in a move that would see the Swedish bank join other firms in exiting an area struggling with shrinking profitability, two people familiar with the matter said last month. Closing it would affect about 15 employees, one person said.
Nordea has confirmed it’s conducting a review of the business, while declining to comment on whether a shutdown is an option. Nordea “is continuously reviewing its operations to identify any areas that may need change,” Durhan said on March 20. “We’re facing a new regulatory environment, which means it is natural to look over profitability.”
The review is part of a wider plan to trim 900 million euros ($1.24 billion) of costs through 2015. Nordea, which has cut 2,500 jobs, will need to eliminate even more to adjust to slow growth, Chief Executive Officer Christian Clausen said on Jan. 29 after reporting fourth-quarter earnings. “We must expect to see the number of employees coming down,” he said.
Nordea offers swaps and options on crude, oil products and metals to help clients hedge risks from raw-material price swings. The commodities unit, part of the bank’s Nordea Markets division, operates from offices in Denmark, Finland, Norway, Sweden, Estonia, Latvia, Lithuania, Poland, Singapore and the U.S., according to its website.
By exiting, Nordea would join JPMorgan Chase & Co., Morgan Stanley and Deutsche Bank AG in shedding parts of their commodities businesses. Revenue from commodities at the world’s 10 largest investment banks dropped 18 percent to $4.5 billion last year, from $5.5 billion in 2012, according to analytics company Coalition Ltd.