Mitsubishi UFJ Securities International to close commodity ops

Thu Feb 6, 2014 6:51am EST
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By Silvia Antonioli and Eric Onstad

LONDON (Reuters) - Japan's Mitsubishi UFJ Securities International became the latest bank to withdraw from the commodities sector, hit by weaker investor interest and tougher regulation.

The institution said on Thursday it was closing its international commodities derivatives business due to concerns about long-term viability.

Higher capital requirements, heavy scrutiny by regulators and declining investor interest has forced many banks to withdraw or slash their commodity businesses, while trading houses are expanding their presence in the sector.

JP Morgan (JPM.N: Quote) is in the process of selling its physical commodities unit and Deutsche Bank (DBKGn.DE: Quote) said last year it was largely exiting commodity trading.

"We reached the decision after we concluded it's difficult to continue the operations after considering profitability and capital efficiency in the long term," said a spokesman in Tokyo for parent Mitsubishi UFJ Securities Holdings.

The bank has launched the process of winding down its commodity operations and will continue to handle existing client transactions, he added.

The spokesman said commodities was a small operation in terms of the overall investment bank and would not impact on earnings, declining to give further details.

Mitsubishi UFJ Securities International is an investment banking arm of Mitsubishi UFJ Financial Group (8306.T: Quote), Japan's biggest bank, and is separate from trading house Mitsubishi Corp (8058.T: Quote).   Continued...

A pedestrian walks past a logo of Mitsubishi UFJ Securities in Tokyo February 3, 2009. REUTERS/Yuriko Nakao