* Hit by fragile investor interest, low volatility
* U.S. oil and gas especially weak
* Many banks closing or reducing commodity businesses
LONDON, Feb 18 Commodities revenue at the top 10
investment banks dropped 18 percent in 2013 in a third year of
declines due to weak investor interest and low volatility, a
consultancy said on Tuesday.
Revenue from commodities for top banks fell to $4.5 billion
last year from $5.5 billion the previous year, London-based
financial industry analytics firm Coalition said in a report.
Many banks have slashed their commodities businesses and
others have completely shut down commodities units, which also
have been hit by tougher regulation and higher capital
requirements after the global financial crisis.
JP Morgan Chase is in the process of selling its
physical commodities unit, and Deutsche Bank said
last year it was largely exiting commodities trading.
The banks' 2013 commodities revenue is less than a third of
the $14.1 billion they racked up in 2008 at the height of the
"Revenues continued to decline, affected by a depressed
client environment and low volatility. In 4Q 13, performance in
U.S. power and gas was particularly weak," the report said.
Wall Street investment banks typically do not break down
their commodity revenue, preferring to cite it as part of the
broader fixed income, currency and commodities category (FICC).
Overall FICC revenues last year slid by 19 percent to $73.9
billion, Coalition said.
Coalition tracks the following banks: Bank of America
Merrill Lynch, Barclays, BNP Paribas,
Citigroup, Credit Suisse, Deutsche Bank, Goldman
Sachs, JPMorgan Chase, Morgan Stanley and UBS
The 19-commodity Thomson Reuters/Core Commodity CRB index
shed 5 percent last year but is up 4.7 percent so far