Commodity trade finance revenue tumbles 40% in Q2 -report

LONDON, Aug 13 (Reuters) – Revenue from commodities trade finance slid 40% year-on-year to $700 million in the second quarter, consultancy Coalition said on Thursday, as banks such as ABN Amro exit the business.

The Dutch banking group said on Wednesday it would end all trade and commodity financing after a series of losses, joining a growing list of banks restructuring or reducing their commodities business to cut risk.

Australia and New Zealand Banking Group (ANZ) and BNP Paribas froze new commodity finance deals following losses.

Consultancy Coalition said in a report that the decline in commodities trade finance revenue accelerated in the second quarter — the decline in the first half was 29% to $1.7 billion.

Full-year 2019 figures were only slightly weaker, slipping by 4% to $4.7 billion, it added. Dominating the business was EMEA (Europe, Middle East and Africa), with 61% of total revenue, versus about a fifth each for the Americas and Asia.

Some banks reeled back commodity finance activity after suffering losses due to exposure to troubled Asian oil traders such as Singapore’s Hin Leong.

The revenue data tracks commodity finance revenue from all banking and corporate clients of the consultancy with annual sales turnover of more than $5 million, Coalition added. (Reporting by Eric Onstad; Editing by David Gregorio)

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