Oil Outshines Other Commodities at Major Banks

Active trading on oil markets was a bright spot in otherwise lacklustre commodities revenue growth at the top investment banks in the nine months to October, a consultancy said.

Revenue from commodities for the leading 10 banks rose 8 percent to $4.3 billion, sharply down from the 21 percent gain in the first half, London-based financial industry analytics firm Coalition said in a report on Friday.

Coalition, which did not break out third quarter revenue, said turnover was affected by the continued withdrawal of some banks from the commodities sector, while the metals business continued to be hit by regulatory pressures and a slowdown in top consumer China.

"Energy's performance was more favourable, due to increased volatility in oil prices," the consultancy said.

Higher volatility in financial markets typically opens up more trading opportunities. Brent crude oil has tumbled nearly 30 percent this year to a four-year low below $80 a barrel, weighed down by excess supplies and lacklustre demand.

Banks' commodities revenue has been steadily declining in recent years as some institutions have slashed exposure and others have shut commodities units.

Credit Suisse said in July it was winding down commodities trading, joining the likes of Deutsche Bank , JPMorgan and Barclays (BCS) in either exiting or significantly downsizing their activities in commodities.

The top banks' commodities revenue came in at $4.5 billion last year, less than a third of the $14.1 billion they racked up in 2008 at the height of the commodities boom.

Coalition tracks the following banks: Bank of America Merrill Lynch, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs , JPMorgan, Morgan Stanley (MS) and UBS. (Reporting by Eric Onstad