* Commodities make up 24 pct drop in fixed income in 2012
* Drop due to low volatility, shrinking client activity
Feb 14 (Reuters) - Revenue from commodities trading atglobal investment banks fell by a quarter last year from 2011,making the asset class the worst performer in the fixed-incomebusiness of banks, an industry survey showed on Thursday.
Low market volatility and shrinking client activity werereasons for the drop, and the effect was particularly evident inenergy and precious metals businesses, according to the surveyby the London-based Coalition, a financial services analyticscompany.
"Performance was also subdued by ongoing concerns aboutincreased regulation and capital sensitivity, pushing banks tore-evaluate their commodities strategies," an executive summaryof the Coalition Index said.
"Energy, investor products and precious metals optionsbusinesses were notably affected," according to the survey,which covered a total of 10 top banks on Wall Street and inEurope.
The banks covered in the report were Goldman Sachs,JPMorgan, Bank of America, Citigroup,Barclays, Credit Suisse, Deutsche Bank, Morgan Stanley, RBS and UBS.
Commodities as a fixed-income component saw a revenue ofabout $6 billion in 2012 versus $8 billion the previous year, the survey showed.
That put commodities at the bottom heap of the fixed incomecategory, despite revenue for the category growing as a whole to$92 billion in 2012 from $76 billion in 2011.
Commodity prices, measured by key sector indices, fell for asecond straight year in 2012, hurt mainly by Europe's protracteddebt woes and also by some worries about the U.S. fiscal crisis.The Thomson Reuters-Jefferies CRB index, which tracks19 commodities in all, fell more than 3 percent on the yearafter an 8 percent drop in 2011.
Wall Street investment banks typically do not break downtheir commodity revenue, preferring to cite them as part of thebroader fixed income, currency and commodity category.
In the fourth quarter of 2012, banks such as Goldman Sachsand Morgan Stanley singled out commodities for being a drag ontheir FICC business. Morgan Stanley particularly said its fourthquarter commodities results were the worst since 1995.
The CRB index for commodities fell 5 percent in thatquarter. Investor fears about an U.S. "fiscal cliff" and anotherpossible recession in 2013 had also kept markets on tenterhooksthrough most of December.
Barclays (BARC)
