JPMorgan Chase & Co is reportedly nearing a deal to sell parts of its physical commodities unit to Swiss trader Mercuria Energy Group for under $1bn.
The sale, which is expected to cut the deal’s value to about $800m from $3.5bn, is anticipated to close this week, reported The Wall Street Journal.
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In March this year, JPMorgan has agreed to sell its physical commodities business to Mercuria Energy Group, a global energy and commodities trading company, for $3.5 billion.
The publication reported that the bank is also planning to sell the rest of the business to other buyers in separate transactions.
Following the sale, the bank intends to be active in commodities financing, derivatives, London Metal Exchange warrant trading, storing and trading of precious metals and liquidity and risk management.
The sale follows increased regulation and capital constraints as well as a falloff in the price of raw materials that made it tough for the bank to participate in high-cost, low-margin business.
JPMorgan’s physical commodity business, formerly led by Blythe Masters, includes units that trade oil, natural gas and base metals, hard assets as gas fields, storage caverns and the Henry Bath & Son Ltd. chain of metals warehouses.
