JPMorgan Chase will sell its physical commodities unit to Mercuria Energy Group Ltd. for $3.5 billion, ending a five-year foray into owning and storing raw materials amid pressure from regulators to leave the business.
Bloomberg News reports that the deal, disclosed in a statement from New York-based JPMorgan today, takes the bank out of industries such as petroleum products and power while cementing Mercuria’s standing among the world’s biggest commodity traders.
JPMorgan will continue to provide services and products tied to commodities including financing, market-making and the vaulting and trading of precious metals, the bank said.
'Our goal from the outset was to find a buyer that was interested in preserving the value of JPMorgan’s physical business', Blythe Masters, head of the company’s global commodities operations, said in the statement. 'Mercuria is a global leader in the commodities markets and an excellent long-term home'.
JPMorgan is selling amid concern among regulators that banks could control prices if they own commodities as well as trade them, or suffer catastrophic losses that would endanger the financial system.
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