Barclays, one of the five largest banks in comodities, “is reportedly planning to exit large parts of its agricultural trading business,” says the Financial Times, with an announcement possible on Tuesday. Morgan Stanley, Deutsche Bank, UBS and Royal Bank of Scotland also have reduced or closed their commodities portfolios in the face of tighter regulation, lower profitability due to stable market prices, and capital constraints, said World-Grain in a summary. Barclays closed its U.S. and European power trading operations in February.
The New York Times says, “The retrenchment may leave rich opportunities for commodity merchants like Mercuria of Switzerland, which is buying the JPMorgan business, or Glencore Xstrata, which do not face the same stringent regulations and capital requirements as banks.” The Times says banks such as Standard Chartered of Britain and Macquarie Bank of Australia are expanding their commodities businesses.