Goldman commodity revenues down 90%
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Wall Street commodity revenues crashed last year to their lowest on record, as tighter regulation and limited price swings squeezed the once dominant traders of Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley.
All three firms reported double-digit percentage declines in revenues for oil, grains and copper trading in 2012, illustrating how the one-time 'Wall Street Refiners' have withered in the face of subdued markets and restrictions on proprietary trading.
The decline is most stark at Goldman, where commodity revenues collapsed by more than 60 percent year-on-year in 2012 to just $575 million, according to the bank's annual report.
Long considered the top commodity bank on Wall Street for its expertise in both physical and financial markets, Goldman's revenues have now fallen by almost 90 percent since 2009 when they totaled more than $4.5 billion.
Morgan Stanley, Goldman's fellow Wall Street pioneer in commodity markets three decades ago, reported a 20 percent decline in commodity revenues in 2012.
JPMorgan, which has grown its commodity business through a series of bold acquisitions since the 2008 financial crisis and now surpasses both Goldman and Morgan Stanley, saw revenues decline by 16 percent to $2.4 billion.
Spokespeople for the banks, who have regularly declined to discuss their commodity results since they began revealing them in filings in 2009, were not immediately available to comment.
The latest results pose questions about the banks' future strategy in the commodities sector, which was estimated to be worth as much as $14 billion to Wall Street annually at its peak.
Following Goldman and Morgan Stanley's lead, the boom in resource markets that started 10 years ago attracted many big banks to trade oil, metals and agricultural products, but many have struggled since the financial crisis.
The Volcker rule has placed restrictions on trading positions held purely for the banks' own profits as part of the Dodd-Frank Act. Lower market volatility has also cut into clients' trading and hedging activities.
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