Banks down, but not necessarily out, in commodities

Investment banks are making deep cuts in commodities, but they are not departing from the market entirely

Mark Pengelly

Hammered by slender revenues, cumbersome regulation and higher capital requirements, banks are continuing their retreat from the commodity market. The latest example is Credit Suisse, which on July 22 announced it would exit its commodities business, citing the need to reduce risk-weighted assets under Basel III capital rules.

While this has been going on, commodity trading houses and oil majors have expanded their trading businesses, providing a keen sense of contrast. The trend was capped by