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March 20, 2014

JPMorgan sells physical commodities unit to Mercuria for $3.5bn

“JPMorgan Chase has agreed to sell its physical commodities business to Mercuria, the Geneva-based trading house, for $3.5bn, becoming the latest investment bank to scale back its activities in the sector.”

“The deal, which is expected to close in the third quarter of 2014, will lift privately owned Mercuria into upper tier of global commodity traders alongside Vitol, Trafigura, and Gunvor.”

“JPMorgan’s physical commodity business is one of the most powerful oil and metals desks on Wall Street. It was put up for sale last year amid rising political and regulatory pressure on banks to retreat to their core business of lending.”

“Commodity trading income at the world’s top 10 investment banks has fallen from a peak of more than $14bn in 2008 to $5.5bn in 2012, according to Coalition, a London-based consultancy.”

“Our goal from the outset was to find a buyer that was interested in preserving the value of JPMorgan’s physical business,” said Blythe Masters, head of JPMorgan’s global commodities business. “Mercuria is a global leader in the commodities markets and an excellent long-term home for these businesses.”

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Read full Financial Times article here.

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