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Revenue earned by leading banks from commodity
trading, selling derivatives to investors and other activities
in the sector rose to $4.9 billion from $4.5 billion in 2013,
London-based financial industry analytics firm Coalition said.
"Despite significant business downsizing, revenues rose due to
increased activity in the energy markets. Meanwhile, metals
continued to be impacted by regulatory pressures and weak
underlying demand," Coalition said.
Higher volatility in financial markets typically opens up more
trading opportunities. Brent oil prices tumbled nearly 50
percent last year due to a global glut of crude oil and as the
Organization of the Petroleum Exporting Countries failed to cut
output.
In 2013, commodity revenues dropped 18 percent in the third year
of declines due to weak investor interest and low volatility.
Despite the recovery in top banks' commodities revenue last
year, it was still just over a third of the $14.1 billion they
racked up in 2008 at the height of the commodities boom.
Many investors have shunned commodities in recent years due to
lackluster performance and as the sector was buffeted by
economic events, moving in step with other assets.
The 19-commodity Thomson Reuters/Core Commodity CRB index shed
18 percent last year.
Banks continued an exodus from commodities trading in 2014 due
partly to tougher regulation and higher capital requirements
after the global financial crisis.
Credit Suisse said in July it was winding down commodities
trading, joining the likes of Deutsche Bank, JPMorgan and
Barclays in either exiting or significantly downsizing their
activities in commodities.
Coalition tracks the following banks: Bank of America Merrill
Lynch, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche
Bank, Goldman Sachs, JPMorgan, Morgan Stanley and UBS.
(Reporting by Eric Onstad; Editing by Vincent Baby)
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