Deutsche Bank withdraws from gold fixing in commodities cuts

Fixing Process

Deutsche Bank will continue in the fixings until a buyer for its seat is found, said the person familiar with the plan.

Barclays Plc, Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA also take part in the gold fixing, published twice daily in a ritual that dates back to 1919. Douglas Beadle, who acts as a consultant to the London Gold Market Fixing Ltd., a company controlled by the five banks, said the fixing process will continue as usual.

During the fixing, conducted by phone, the designated chairman gives a figure close to the current spot price in dollars for an ounce of gold. The firms then declare how many bars they wish to buy or sell at that price, based on orders from clients as well as their own account. The talks continue until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other.

HSBC and Bank of Nova Scotia are the other two silver fixing members, a process that occurs once a day.

Fixing Members

Aurelie Leonard, a spokeswoman for Barclays, HSBC spokeswoman Shani Halstead and Saphia Gaouaoui, a spokeswoman at Societe Generale, declined to comment. Joe Konecny, a spokesman for Bank of Nova Scotia, didn’t immediately return a voice message left outside of normal Toronto business hours.

Deutsche Bank said last month it will exit dedicated energy, agriculture, dry bulk and base metals trading and transfer its financial derivatives and precious metals desks to the fixed income and currencies division. The decision to cut jobs will have “no material impact” on earnings, it said.

Its investment banking and trading unit, which includes commodities, employed 25,062 people at the end of September, company filings show. The bank generated $881 million in raw materials revenue in 2012, according to a JPMorgan report on April 11.

Commodities revenue at the world’s 10 largest investment banks probably dropped 14 percent to $4.7 billion in 2013, London-based analytics company Coalition said in November. The biggest banks have cut commodities staff to the lowest since at least 2009, according to Coalition.

Commodities Trading

JPMorgan, the biggest U.S. bank by assets, said in July it plans to get out of the business of owning and trading physical commodities ranging from metals to oil. Morgan Stanley cut 10 percent of its workforce in the commodity division last year and agreed to sell its global oil business to OAO Rosneft, Russia’s largest petroleum producer.

Citigroup Inc. said last year that the “super cycle” of commodities gains has ended because supply caught up with demand. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell 2.2 percent in 2013, the first annual decline in five years. Silver slumped 36 percent last year and gold tumbled 28 percent, the biggest declines since 1981. The metals were the second- and third-worst performers in the S&P gauge, after corn.

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