Deutsche Bank says it is significantly scaling back its commodities business.
The bank says the business will now focus on its core competencies of financial derivatives and precious metals.
This decision will result in Deutsche Bank closing the dedicated trading desks for energy, agriculture, base metals and dry bulk although the bank says it will “have no material impact on the Bank's financial results”. The desks are believed to be in Houston, London and Singapore.
A special commodities group has been established by Deutsche to manage an orderly wind down of the impacted businesses. The bank adds its financial derivatives and precious metals businesses will be integrated into its fixed income and currencies platform “to take advantage of existing synergies”.
Colin Fan, co-head of corporate banking and securities at Deutsche Bank, says, “As part of Strategy 2015+, we are actively managing and reviewing our business portfolio. The decision to refocus our commodities business is based on our identification of more attractive ways to deploy our capital and balance sheet resources. This move responds to industry-wide regulatory change and will also reduce the complexity of our business.”
Deutsche’s exit follows a similar move by JP Morgan, which was announced in July 2013, and is widely seen as a response to moves by global authorities to have banks put aside more capital to support commodity trading activities.