Deutsche Bank exits coal as Morgan Stanley reaffirms its support

Weak coal prices and environmentalist pressure has seen Deutsche Bank (DB) drop its coal investment team, however Morgan Stanley has reiterated its support of coal.

Last week six senior members of DB’s metals and mining investment team, which handled coal, left the company to join Jefferies Group, according to Bloomberg.

This followed on the back of the financial house’s plan to phase out investment for resources firms that used mountaintop removal methods to mine coal, which some have posited as a driver for the exodus.

Deutsche reportedly has no plans to replace the gap left by the six senior members, the New York Times reports.

“The large banks are under significant pressure from environmental groups to limit their activity in fossil fuels and mining across the board,” Ted O’Brien, chief executive of Doyle Trading Consultants, told the New York Times.

“This move might reflect an investment banking team that was no longer that important to a large bank and that will now be able to practice their niche under somewhat less scrutiny.”

Deutsche Bank is reportedly facing a major crisis, slashing 9000 employees and halting operations in 10 countries.

Despite DB seeing little upside from coal, investment bank Morgan Stanley has thrown its support behind coal, particularly thermal coal, stating its belief in the future of clean coal.

“The common perception is that coal-fired power has no role to play in a low-emissions future,’’ Morgan Stanley notes recently said, according to The Australian.

“We believe this is not the case, as carbon emissions can be reduced by over 20 per cent (in HELE plants), with the benefit further complemented by further reduction through the use of higher energy coal.”

However, its reports were not wholly positive, with the investment bank forecasting little likelihood of a strong resurgence in coal.



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