Bloomberg News

Commodity Returns for Banks Curbed by Regulation, McKinsey Says

November 12, 2012

Commodities will become less profitable for banks because of tightening global regulation of capital markets, according to McKinsey & Co.

Return on equity in commodities is projected to drop to 8 percent from 20 percent, McKinsey said in its annual review of the banking industry last month.

“More complex and burdensome” rules will have a “significant” impact on banks, making it harder to raise capital and to support growth in lending, according to the e- mailed report. “Regulation will fundamentally deteriorate economics of capital markets products.”

To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.


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