With JPMorgan’s COMEX gold vault down to all-time historic lows and the firm looking at a $1 billion settlement with FERC over Blythe Masters’ manipulation of the electricity market, JPM has just announced shocking news that the firm is seeking a sale, spin off or strategic partnership of its physical commodities business.
Yes, you read that correctly. Blythe and Jamie are apparently attempting to unload the empty gold warehouse hot potato as soon as possible.
Just to be clear, we say this half joking because they’re not ditching their COMEX precious metals vault business nor ending their own precious metals vault. But given the recent pressure from regulators — $1 billion FERC settlement, investigation into aluminum stockpile warehousing, etc. — what better way to distract from core paper derivatives trading than to exit secondary, direct physical market activity?”
J.P. Morgan to Explore Strategic Alternatives for its Physical Commodities Business
New York, July 26, 2013 – JPMorgan Chase & Co. (NYSE: JPM) announced today that it has concluded an internal review and is pursuing strategic alternatives for its physical commodities business, including its remaining holdings of commodities assets and its physical trading operations.
To maximize value, the firm will explore a full range of options over time including, but not limited to: a sale, spin off or strategic partnership of its physical commodities business. During the process, the firm will continue to run its physical commodities business as a going concern and fully support ongoing client activities.
J.P. Morgan has built a leading commodities franchise in recent years, achieving a top-ranked revenue position. The business has been consistently named as a top client business in Greenwich Associates’ annual client surveys and was recently named Derivatives House of the Year by Energy Risk magazine.
Following the internal review, J.P. Morgan has also reaffirmed that it will remain fully committed to its traditional banking activities in the commodity markets, including financial derivatives and the vaulting and trading of precious metals. The firm will continue to make markets, provide liquidity and offer advice to global companies and institutions that have, for years, relied on J.P. Morgan’s global risk management expertise.