But nearly two years on, European banks are under enormous pressure in credit markets and only very large banks have scope to expand. Credit Agricole may be the first of several banks to drop commodities trading, said the senior commodities trader:
"The major players - Goldman Sachs, Morgan Stanley, Merrill Lynch, Deutsche Bank - are still hiring to replace people who leave to funds and trading houses. But small and medium-sized banks are just shutting everything down."...
A senior oil trader at a major European bank said only very large players could now survive in commodities: "They (Credit Agricole) wanted to have a commodities arm but the appetite for risk was so small it was impossible to do big deals."...
Cargill is not alone among trading houses responding to a disappointing 2011 performance, Swiss-based coal traders said.
Coal has been a particularly tough market for traders this year because prices have been largely stagnant and liquidity has been lower. Without liquidity and volatility, trading profits have been hard to come by....
"In 2008-2009 everybody made money because prices were so volatile but this year prices have been stagnant and for the first time in a decade, even the big trading houses are facing a downturn in earnings," he added.
Last month Cargill former head of coal based in Geneva, Patrick Bracken, left to return to the U.S. and Peter Biston, Geneva-based head of power and gas, a junior gas trader and a power trader lost their jobs.
Cargill Ferrous International in November shut its physical steel trading desks in Hong Kong and Geneva and its top sugar trader, Jonathan Drake, left in early December.
"That (restructuring) makes sense. In the previous structure oil made a lot of money and they couldn't bonus traders as power and gas were down. Now oil can live or die by its own performance," said Peter Henry, senior consultant with Commodity Search Partners.
Reuters US
