Monday, 5 January 2015 00:00
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Citigroup has bought the commodity trading books of Credit Suisse, sources familiar with the matter said on Friday, as the U.S. bank extends its reach in the sector as others retreat.
Citi will buy Credit Suisse’s base and precious metals, coal, iron ore, freight, crude oil, oil products and U.S. and European natural gas books, the source said.
The move from Citi follows its purchase of Deutsche Bank’s metals, oils and power books in the summer and autumn.
Credit Suisse announced in July that it was exiting commodities trading as tighter regulations and higher capital requirements squeezed profits.
JPMorgan, Barclays and Deutsche have all shut down or cut back their natural resources operations.
The deal does not include Credit Suisse’s U.S. power trading book. Credit Suisse has not been an active trader in U.S. power since 2008 when it largely shut down the desk, but it retains a number of longer-term exposures.
Since announcing the closure of its commodity business in July, the Swiss bank has moved its commodity positions from its investment bank to its non-strategic unit, which it uses to wind down or find alternative buyers for outstanding investments.
Credit Suisse has retained its commodity investor products business, including a number of indices. It will still be able to trade precious metals electronically as part of its foreign exchange desk.
