Revenue from commodities at the largest investment banks sank to the weakest in more than a decade last year, laid low by a rout in prices for everything from metals to gas.
Income at Goldman Sachs Group Inc., Morgan Stanley and the 10 other top banks slid by a combined 18 percent to $4.6 billion, according to analytics firm Coalition Ltd. That was the worst performance since the London-based company began tracking the data 11 years ago, and a slump of about two-thirds from the banks’ moneymaking peak in 2008.
Revenues are unlikely to return to the heights of $14.1 billion seen at the top of the market, according to George Kuznetsov, head of research at Coalition.
‘The competitive landscape is very different,’ he said by phone. ‘Financial institutions are now much more regulated. We have significantly less involvement of the banks in the physical commodities market, and banks do not take as much risk as they used to in 2008-09.’ Reduced commodities exposure by funds and other investors last year also contributed to diminished revenues, according to Kuznetsov.
This post was published at David Stockmans Contra Corner on February 23, 2016.
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