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Monday’s Headlines: Banks are Getting into Hot Oil

U.S. banks are getting into the oil business, as Morgan Stanley, J.P. Morgan and Goldman have all struck deals with refineries, competing with oil traders and merchants, according to a Financial Times story. The trend reflects the toll high oil prices have taken on refineries, who are increasingly dependent on banks to finance their stocks. Said J.P. Morgan’s commodities head: “Banks are not competitors of [the refiners] but rather facilitators for them. That, along with risk capacity and balance-sheet capacity, is the reason why banks play a role.”

Goldman is the largest supplier of crude and the largest customer of refined oil for refineries owned by Alon in California, Louisiana and Texas. Banks are lobbying Washington to loosen rules governing bank’s commodities trading, which would allow them to more effectively compete with nonbanks in the sector.

 

Other News:

Goldman opens a Perth office with teams of IB, equity sales, research and private wealth. [WSJ]

Man Group formed a unit in Singapore to explore opportunities in Asia. [Bloomberg]

RBS-owned motor insurer Direct Line is a takeover target by Blackstone and Bain. [Reuters]

J.P. Morgan’s private equity unit is a bright light at the troubled bank. [WSJ]

Wells Fargo’s Q2 mortgage revenue jumped 80 percent. [WSJ]

Citi’s Q2 profit fell 12 percent but beat expectations on loan growth. [CNNMoney]

London sheds its stodgy banking culture. [DealBook]

Japan’s Dai-ichi Life Insurance and Korea Life submitted bids for ING’s insurance unit in Southeast Asia. [Reuters]

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