Jan. 17 (Bloomberg) -- Deutsche Bank AG, Germany's largest bank, plans to increase its commodities staff by 15 percent to 25 percent this year as record prices for oil, gold and soybeans increase the potential for profits.

The bank has 150 to 250 people in its commodity unit now, David Silbert, Deutsche Bank's global head of commodities, said in a Jan. 15 interview in London. He wouldn't be more specific.

Securities firms, such as Lehman Brothers Holdings Inc. and Credit Suisse Group, and other companies added a record 450 people for commodities last year, according to Options Group, a New York-based recruitment firm. At the same time, financial institutions eliminated about 86,000 jobs related to the U.S. mortgage market, according to data compiled by recruiter Challenger Gray.

``We haven't seen a diminishing appetite for growth in commodities, pre-subprime or now,'' Silbert, 37, said. ``If anything, we think there's a need for a robust commodities business even more so today.''

The Frankfurt-based bank generated revenue of about 200 million euros ($292 million) from commodities in 2006, compared with 2.6 billion euros by its biggest rival that it didn't name, Anshu Jain, head of global markets, said in May. Deutsche Bank is scheduled to report 2007 earnings on Feb. 7.

``The risk is that they may have made too many guaranteed compensation commitments should the business not grow as rapidly as they expect or commodities face a downturn,'' said George Stein, a director at Whitney Group, a New York-based financial recruiting firm.

Market Share

Deutsche Bank has announced about 2.28 billion euros in writedowns and trading losses since the U.S. subprime mortgage crash roiled debt markets. It fell 78 cents, or 0.9 percent, to 80.82 euros in Frankfurt today. The stock has fallen 22 percent in the past year, compared with a 26 percent decline in the Bloomberg Europe Banks and Financial Services Index of 60 companies.

Deutsche Bank is eliminating 250 to 300 jobs in its global markets division, according to a person with knowledge of the reduction. The staff cuts, which began this week, are across the unit run by Jain, including equity sales and trading, debt capital markets and derivatives, said the person, who declined to be identified.

Financial institutions eliminated more than 153,000 jobs last year, according to Chicago-based Challenger Gray. That was more than triple the 50,300 jobs eliminated in 2006.

Commodity Traders

Silbert declined to comment on bonuses paid to commodity traders and whether compensation would be affected by losses in other parts of the business. He joined Deutsche Bank in March from Merrill Lynch & Co., where he was the European head of commodities. Silbert previously worked at energy-trading venture Entergy-Koch LP, which was bought by the New York-based bank in 2004.

Banks such as Deutsche Bank and JPMorgan Chase & Co. have been expanding in commodities to meet demand from clients such as airlines and utilities to manage costs. Goldman Sachs Group Inc. and Morgan Stanley are the biggest commodities traders on Wall Street by revenue, according to estimates by Ethan Ravage, a financial-services industry consultant in San Francisco.

``We are a lot closer to the chasing pack'' than the top banks trading commodities, Silbert said.

Deutsche Bank's planned areas for growth this year are crude oil and precious and industrial metals, he said. The bank will add people in Asia for metals, in London for steel, in New York for agriculture and globally for oil, he said.

About half of the bank's commodities employees are in London, a third in the U.S. and the rest in Asia, Silbert said.

`Physical Commodities'

The bank trades contracts including oil, U.S. natural gas and power, European power, carbon emissions and metals. Deutsche Bank this year plans to start trading agricultural contracts and crude oils such as Urals, Russia's benchmark export blend, and Dubai crude, Silbert said.

The bank last year hired John Redpath from Citigroup Inc. as global head of oil products and agriculture, Ray Key from Morgan Stanley as worldwide head of metals and Simon Grenfell from Macquarie Bank Ltd., who oversees commodities in Asia.

Deutsche Bank and UBS AG bought rights to about 2 percent of Chesapeake Energy Corp.'s gas production and reserves to profit from swings in natural-gas prices, according to a Jan. 2 statement from Oklahoma City-based Chesapeake.

``This is a good example of how having a physical commodities business can work hand in glove with a bank,'' Silbert said. ``We would look for more deals like this in the future.''

To contact the reporter on this story: Saijel Kishan in London at skishan@bloomberg.net

Last Updated: January 17, 2008 12:30 EST