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BANKS: Citi still sees opportunity in more regulated, less volatile commodities markets
August 08, 2014 - 15:52 GMT
Citi is confident that it can run a lucrative commodities business in less volatile, more heavily regulated markets, the bank’s head of commodities sales told Metal Bulletin.
Increasing compliance costs and low volatility have together
driven margins in commodities banking progressively lower over
the past few years and changed the landscape of the sector
markedly, Citi's José Cogolludo said in an interview.
With costs rising and order volumes falling, running a vanilla
agency-style commodities brokerage is not an attractive
proposition in the post-crisis, post-supercycle environment, he
said. In addition, new regulations are prohibiting banks from
trying to boost profits by trading commodities for their
accounts. In any event, this is becoming less rewarding as
commodity prices chop about in narrower ranges, he said.
All material subject to strictly enforced copyright laws. ©
Euromoney Institutional Investor PLC.
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