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Commerzbank Ditches Precious Metals Division

May 20th, 2017 by

Commerzbank is a German bank that carries a fair amount of international clout. It is Germany’s largest lender, its second-largest bank by assets, and, more so than its beleaguered neighbor Deutsche Bank, enjoys a strong reputation around the world.

Now, Commerzbank is unexpectedly scrapping its precious metals business to focus more on other departments of the company.

Exiting the Market

Commerzbank was founded in 1870 and has grown into a major institutional player in Europe and abroad. It has survived through some of the most tumultuous times in modern history, including the financial collapse of the Weimar Republic—which preceded the Great Depression and the rise of the Nazi Party—and the partition of East Germany and West Germany following the end of World War II. (The bank lost 45% of its buildings and offices as a result of the territorial split, which ended when Germany was reunified after the fall of the Berlin Wall.)

In short, it has persisted through ups-and-downs that few other institutions, financial or otherwise, were able to weather.

(photo: Jason Baker (Flickr) [Creative Commons CC BY 2.0] )

(photo: Jason Baker (Flickr) [Creative Commons CC BY 2.0] )

Despite this history of soldiering through, Commerzbank has apparently determined that its involvement in the precious metals market is no longer a net positive for the bank. It will ditch its precious metals division in the coming weeks and months. By the end of the year, Commerzbank is expected to have nixed its refining operations for gold and silver, its vault storage for precious metals, as well as its transportation and delivery network for the metals.

For some banks, especially the biggest ones, gold is not viewed as particularly “valuable” because it generates no yield. Clients and investors are largely advised to shun precious metals for this reason. Still, these same institutions often hold gold as an asset.

Naturally, the bank declined to comment further on why it was shutting down its precious metals business. Its bullion trading desks in Singapore and Luxembourg will presumably be closed, although it does seem that the company plans to move the affected employees to other parts of the company rather than terminate them.

 

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