JPMorgan’s commodities biz bought by Swiss firm

JPMorgan's commodities biz bought by Swiss firm
Photo: Timothy A. Clary/AFP/File
US banking giant JPMorgan Chase announced on Wednesday that it is selling its physical commodities business to Geneva-based trading firm Mercuria Energy Group Limited for $3.5 billion.

The deal divests physical commodities assets, transactions and energy and metals trading staff to Mercuria, which was founded in 2004 by two former Swiss traders at Goldman Sachs and is well known in energy and commodity trading circles.

With 1,000 employees, Mercuria trades in more than 50 countries through a network of 37 offices.

The company, which began with an emphasis on oil trading, says its activities encompass "all key energy products and a wide range of dry bulk commodities". 

Mercuria also has an asset portfolio that includes ownership in logistics and storage facilities.

Its main business hubs are in Geneva, Beijing, Shanghai, Singapore, Chicago and Houston.

JPMorgan said it will continue to provide financing and some other services in commodities markets.

The deal is expected to close in the third quarter following regulatory approvals.

The transaction is not expected to materially affect JPMorgan's earnings, the bank said.
The transaction comes as JPMorgan seeks to pare back exposure to riskier business lines as it aims to exit a period of heavy regulatory scrutiny and billions in federal penalties from its role in the mortgage-finance scandal and other controversies.

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