JPMorgan Chase & Co. (NYSE:JPM), the biggest U.S. bank by assets, said it will sell its physical commodities business for $3.5 billion to the energy and commodities trading company Mercuria Energy Group Ltd. Shares fluctuated.
JPMorgan will continue to provide traditional banking services and products tied to commodities including financial products, market-making and the vaulting and trading of precious metals, the New York-based bank said in a statement today.
The deal takes the bank out of industries such as petroleum products and power while cementing Mercuria’s standing among the world’s biggest commodity traders.
"Our goal from the outset was to find a buyer that was interested in preserving the value of J.P. Morgan’s physical business,” Blythe Masters, head of J.P. Morgan’s global commodities business, said in the statement. “Mercuria is a global leader in the commodities markets and an excellent long-term home for these businesses.”
The transaction, to close in the third quarter, is not expected to have a material impact on JPMorgan Chase's earnings, the bank said.
JPMorgan is selling its multi-billion dollar physical commodities division amid fears 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.
Mercuria, a firm founded by former Goldman Sachs traders, has become one of the world’s four biggest independent commodities traders. It has offices in 28 countries and employs more than 1,000 people.
JPMorgan was down less than 0.1 percent to $58.02 at 10:32 a.m. in New York. The stock earlier rose as much as 0.3 percent.