Deutsche Bank set to scale back commodity unit

City A.M. Reporter
DEUTSCHE Bank pulled the plug on its global commodities trading business yesterday, cutting 200 jobs as it becomes the first major bank to exit the once lucrative sector due to toughening regulations and diminished profits.

Germany’s largest bank, which was one of the top-five financial players in commodities, will cease energy, agriculture, base metals, coal and iron ore trading, it said in a statement, retaining only precious metals and a limited number of financial derivatives traders.

The cuts are expected to largely fall on its main commodity desks in London and New York. The move comes as the financial sector’s role in commodity trading has been squeezed by lower margins, higher capital requirements, and growing political and regulatory scrutiny of the role of banks in the natural resources supply chain.

“The decision to refocus our commodities business is based on our identification of more attractive ways to deploy our capital and balance sheet resources,” said Colin Fan, co-head of corporate banking & securities at Deutsche Bank, in a statement.