Goldman Sachs drops from top three banks for commodities revenue

Goldman Sachs is no longer among the top three commodities banks, according to Reuters.

The US-based investment bank has been in the top three chart since Coalition, a data analytics firm, started compiling figures in 2010. In 2017 the top three banks for commodities-related revenue were JPMorgan, Morgan Stanley and Citibank.

Last year saw Goldman Sachs post one of its worst results on record. The bank has recently appointed a new commodities finance team to improve performance by developing a stronger corporate client base.

The banks with the largest revenue in commodities for 2017 were JPMorgan and Morgan Stanley, according to Coalition. In the previous year, Goldman Sachs had top ranking while JPMorgan and Citibank were in third place.

More stringent regulation and poor performance have been exerting downward pressure on revenue from commodities trading in recent years. In 2017 the sector stood at $4.3bn, the lowest in a decade. At the peak of the commodities cycle in 2008, revenue stood at $15.9bn.

Kingwell to take 51% in Russian gold mine operator

Hong Kong-based electronics firm Kingwell Group Ltd (HKG:1195) announced it had agreed to buy for $13m (€10.4m) a 51% stake in Russian firm Zolotoy Standart, the operator and owner of a gold mine in Russia’s Amur area.

The transaction is in line with the buyer’s recently unveiled plan to evaluate business opportunities within the natural resources and mining sectors as the performance of its electronics business is weakening. Zolotoy Standart holds the exploitation license for a gold mine in Amur’s Zeyskiy region, whose value is at least $19m, according to Kingwell.

As part of the plan, Kingwell is to subscribe for newly issued shares in Zolotoy Standart’s 100% parent company Commerce Prosper Ltd, giving it a 25.5% interest in the company. It is also to buy a 25.5% stake in Commerce Prosper from shareholder Araik Khachatryan. Both transactions will be funded with avalable cash, bank borrowings and the issues of convertible notes, Kingwell said. Commerce Prosper is to use part of the proceeds for general working capital needs, such as the establishment of exploitation and production facilities.

Furthermore, Kingwell will get an irrevocable option to take an additional 14% interest in the target company for $2.66m. The option can be exercised after the first and before the fifth anniversary of the current acquisition deal.