* Comes as part of job cuts in investment banking
* Commodities trading suffers from tighter regulations
* Silbert, formerly gas trader, led Deutsche push in
By Dmitry Zhdannikov and Simon Falush
LONDON, Dec 12 Deutsche Bank will
make steep staff cuts at its U.S. and European power and gas
trading desks, with the departures of dozens of traders and its
global head of commodities, David Silbert.
Several sources close to the situation said on Wednesday
the bank was shrinking the workforce as part of an earlier
announced plan to chop 1,500 positions in corporate banking to
save billions of euros amid a profit slump due to the euro zone
Cuts on the power desk will be the steepest in the
commodities division, they added, in a move resembling those by
Deutsche's top rivals in commodities trading as banks retreat to
the core at a time of tightening regulations.
A Deutsche spokesman declined to comment.
"Power and gas will be hit hard," one source said.
"They are letting more than 50 go globally, mostly in
Houston, but there will be redundancies in Europe," a
recruitment industry source said, while a source on the desk in
Europe also confirmed the departures.
The cutback comes as Germany's biggest bank is hit by a
widening probe linked to a tax scam involving the trading of
carbon permits, and hundreds of police and tax inspectors raided
its Frankfurt offices on Wednesday.
Deutsche is one of the biggest players in the $148 billion
European carbon market.
Silbert, a U.S. gas trader in the 1990s, joined Deutsche
from Merrill Lynch in 2007 and turned the bank into a top five
player in trading oil, metals and power among banks.
Deutsche, together with Barclays and J.P. Morgan
, broke into the commodities arena in the last decade
with acquisitions or aggressive growth to challenge established
veterans Goldman Sachs and Morgan Stanley.
But all five had to shrink operations after the 2008
financial crisis in the face of rising regulations and a
regulatory crackdown on proprietary trading, when deals are done
by banks for themselves rather than on behalf of clients.
Regulators say banks should focus on serving the clients and
helping the economy with credit.
"The total wallet (revenue for all banks) back at the peak
was about $14 billion for the banking sector in commodities
trading. I'd imagine this year it'll be about $7 billion,"
Silbert told Reuters in an interview this year.
Deutsche's rivals such as Goldman or Barclays have already
seen departures of high-profile traders to less regulated
trading houses and hedge funds, while Morgan Stanley has even
considered spinning off its commodities business, sources said.
One source familiar with the developments said Deutsche had
no plans to exit any of its commodities trading businesses
despite downsizing the operation.