Goldman Sachs Set to Clean up after Commodities Exodus
According to a Greenwich Associates survey last year, the four largest banks trading commodities derivatives last year were Goldman Sachs (GS), Morgan Stanley (MS), Barclays Plc (BCS) and JPMorgan Chase (JPM). This year, only one of the four — Goldman Sachs — is maintaining its presence in commodities. Yesterday, Barclays acknowledged that it would be exiting the commodities business in the near future — except for trading precious metals and derivatives tied to energy. The Barclays move follows last month’s moves by JPMorgan and Morgan Stanley to get out of this sector in response to regulators calling for bank cutbacks. Master of the obvious, Jeffrey Harte of Sandler O’Neill & Partners, said, “The more banks that exit commodities trading, the less competitive it becomes for the banks which stick with it.” That means Goldman Sachs now stands head and shoulders above its peers in trading commodities derivatives. And after a profitable Q1 2014, there could be further gains ahead.