Exclusive: JPMorgan trumped competitors in commodities last year

Fri Mar 2, 2012 10:38am EST
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By Jonathan Leff and David Sheppard

NEW YORK (Reuters) - Blythe Masters, JPMorgan's global head of commodities, has steered the bank's expanded franchise to record revenues exceeding $2.8 billion in 2011, more than long-time industry leaders Goldman Sachs and Morgan Stanley, the three banks' data showed this week.

The more than threefold surge in revenues marks a dramatic turnaround for British-born Masters, one of the top female executives on Wall Street, who came under pressure in 2010 as revenues fell following the acquisition of RBS Sempra's large metals and energy trading desks, according to sources and company data.

By contrast, Wall Street's commodity trading pioneers have stumbled, with Morgan Stanley's revenues shrinking for a third consecutive year -- the worst streak since at least 1995 -- and Goldman Sachs commodity unit J. Aron is nursing a large drop in revenues since raking in more than $4.5 billion in 2009.

The data illustrate the shake-up of a sector long dominated by the oldest commodity franchises on Wall Street, which are struggling after being forced to shut down riskier proprietary trading and amid the threat of losing top talent to aggressive merchant traders. Whipsaw market volatility has also cut into trading and hedging activity by their clients.

Goldman's Isabelle Ealet, who was promoted out of the division in January after leading it for years, saw revenues stagnate at $1.6 billion last year, according to a regulatory filing by the firm.

Morgan Stanley revenues fell 18 percent in 2011 due to "lower levels of client activity", the bank said, taking its three-year decline to nearly 60 percent. Based on Reuters' calculations, revenues peaked at around $3 billion in 2008, declining to some $1.3 billion last year, the lowest since 2005.

To be sure, the raw numbers themselves are not a definitive indicator. JPMorgan described itself this week as one of the three largest commodities players, and some say it still lags behind Goldman Sachs when adjusting the data for accounting differences among the banks. But the trajectory is clear.

George Stein, managing director of headhunting agency Commodity Talent in New York, said Masters' strategy of "dominance through acquisitions and size" had been vindicated.   Continued...

Traders work in the JP Morgan company stall on the floor of the New York Stock Exchange in New York July 15, 2010.  REUTERS/Lucas Jackson