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JPMorgan Facing a “Hard Sell” in Crowded Market

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JPMorgan Chase & Co. (JPM.N) is looking to sell their oil, gas, power, and metals trading division, but they may have a hard time finding a buyer. Most of the banks that would be potential buyers are no more interested in this business than JPMorgan is. JPMorgan has until July 2015 to make the sale, and they have not yet said whether they intend to split the division into pieces or sell it whole. The company has been building the division up over several years, with major purchases in 2008 (Bear Sterns – power), 2009 (UBS – agriculture, energy), and 2010 (RBS Sempra Commodities – metals, oil). However, they are now under pressure with scrutiny from several quarters; and the Federal Reserve is reconsidering the decision that originally allowed physical commodities trading for banks. Some potential buyers of this trading division include BTG Pactual (Brazil), Macquarie Group (Australia), Noble Group (Hong Kong), Vitol (Switzerland), and Mercuria (Switzerland). JPMorgan is the United States’ largest oil importer and the 8th largest member of the natural gas market. They can only hope that this sale is more successful than their previous attempt at selling an energy division, back in 1998, when they put their five-year-old physical energy trading division out for sale and completely failed to find a buyer.

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JPMorgan Facing a "Hard Sell" in Crowded Market by
Authored by: Harrison Barnes