Institutional Investor (April 24)
To strengthen their balance sheets, large banks (including Deutsche Bank, Royal Bank of Scotland, UBS, Morgan Stanley, JPMorgan Chase and Barclays) have been reducing their commodities businesses, mainly through sales to independent trading companies. With these sales “to smaller players, conflicts of interest remain a potential problem” and nobody’s sure whether new problems will accompany this major shift. Given the skinnier balance sheets of the new players, market liquidity could conceivably suffer. In addition, “concerns abound that the underlying problems that have traditionally beset the commodities markets are simply being pushed onto a new and less tightly regulated set of actors.”
Tags: Balance sheets, Banks, Barclays, Commodities, Conflicts of interest, Deutsche Bank, JPMorgan Chase, Liquidity, Morgan Stanley, Regulated, Royal Bank of Scotland, Shift, Trading, UBS
