* Bank 2012 commodity revenue estimated at $6 bln
* Hit by lower volatility, reduced client activity
* Heavier regulation, capital requirements also factors
LONDON, Feb 14 (Reuters) - Investment bank revenue fromcommodities trading dropped by about a quarter last year due tolower volatility and lacklustre client business, financialsector consultant Coalition said.
Turnover in commodities was also affected due to stifferregulation and more rigorous capital requirements, Coalitionsaid in a report on overall performance by the world's 10biggest investment banks.
Commodity revenue from the top investment banks fell toabout $6 billion in 2012 from about $8 billion the previousyear, Coalition said in the report released on Thursday. Banksdo not break out revenue from commodities when reportingresults.
"Low volatility and reduced client activity led to a 24 percent drop in revenues. Energy, investor products and preciousmetals options businesses were notably affected," the reportsaid.
"Performance was also subdued by ongoing concerns aboutincreased regulation and capital sensitivity, pushing banks tore-evaluate their commodities strategies."
When Morgan Stanley reported last month, it said thatits fourth-quarter commodities results were the worst since1995. In the same week Goldman Sachs said its commodityresults were "significantly lower".
Another consultant, Tricumen, said earlier this month thatcommodities revenue at top U.S. banks tumbled by a third in thefourth quarter.
U.S. banks have had to shrink operations to comply withtighter bank regulation since the 2008 financial crisis. Thisincludes the Volcker rule banning banks from proprietary trading- when deals are done by banks for themselves rather than onbehalf of clients.
The other eight banks that Coalition tracks are Bank ofAmerica/Merrill Lynch, Barclays, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan, RBS and UBS.
Barclays (BARC)