KeyCorp (KEY) and Fifth Third Bancorp (FITB) are among the regional lenders stepping up their commodities business as the big Wall Street banks pull back. "[Regional lenders] are definitely beginning to fill the void left by some of the big guys," says Bonanza Creek Energy CFO Bill Cassidy.
Others stepping in include Australian bank Macquarie (MQBKY), Cargill, and BP. Last year, the top ten regional banks held an average of $23B in commodity derivatives on their books, up nearly 50% from 2009. Still, the amount is just a speck compared to the $3.9T on the books of the top 6 Wall Street banks.
Even this modest amount is meaningful though, says Guggenheim's Marty Mosby, as it allows the regionals to "pop out and create some incremental revenue growth."