Deutsche Bank looks to expanse commodity trade finance offering

This type of finance covers lending across the energy, agricultural, and metal commodity value chains, from producers to refineries and distributors, as well as financing for the ‘middlemen’, the commodity traders. In 2019, the total revenue pool for commodity trade finance globally was USD 4.7 billion, according to Coalition, an S&P Global research company, as stated by spglobal.com.

Deutsche Bank expects ‘flat to single-digit’ growth in revenues from commodity trade finance in 2021, depending on the development of commodity prices. The news comes as European peers scale back their activities in the sector. ABN AMRO Bank NV announced in August 2020 that its trade and commodity finance activities would be ‘discontinued completely’, while in the same month, BNP Paribas SA suspended new commodity trade finance deals in Europe, the Middle East, and Africa. Moreover, in September 2020 it shut its Switzerland-based commodity trade finance business, according to Bloomberg News, as cited by spglobal.com.

Société Générale also decided to close its trade commodity finance unit in Singapore following the collapse of trading firm Hin Leong Trading, according to reports from the same news outlet. A drop in transaction values due to unprecedented low oil prices and a number of high-profile bankruptcies have hurt banks' commodity trade finance revenues during the pandemic.