View the article online at http://citywire.co.uk/wealth-manager/article/a708373
More than 24 parties eye JP Morgan’s $3.3bn commodities arm
by Dylan Lobo on Oct 10, 2013 at 08:02
JP Morgan Chase’s physical commodities business is at the centre of a frenzied bid battle.
According to the Financial Times the unit - which has commodities valued at around $3.3 billion and delivers an annual income of $750 million – has won the bid interest of more than a dozen firms.
The paper indicates potential suitors include pension funds and trading houses, with the first round of bids due before the end of the month.
JP Morgan Chase announced its plan to exit physical commodities in the summer in a move which surprised markets, as the firm had forked out billions growing the business during the previous 10 years in a bid to become the biggest player in the market.
The decision came amid growing regulatory pressure in the sector, which had seen the Federal Energy Regulatory Commission’s enforcement arm accuse JP Morgan staff of manipulating energy prices in California and the Midwest. Meanwhile the Federal Reserve is reviewing the policy allowing banks to hold physical commodity assets.
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