New York, NY, United States (4E) – JPMorgan Chase agreed to sell its physical assets and trading business to Swiss trader Mercuria Energy Group Ltd., a relatively unknown player outside the physical commodities trading industry, according to a source with knowledge of the matter.
The terms of Wednesday’s deal are not yet clear, though the bank’s assets could be valued at $3.3bn, according to the company’s books when it were initially opened to potential buyers in October.
The deal is expected to be finalized in the summer, the source said. It would be Mercuria’s biggest acquisition to date. The closely-held company was formed in 2004 by Swiss traders Daniel Jaeggi and Marco Dunand.
The transaction comes amid a sea of change in the global commodities-trading business because of tighter regulation and capital limits, which have made it hard for major U.S. banks to enter the high-cost, low-margin business.
The U.S. Federal Reserve is assessing whether new rules are required to constrain banks’ exposure to the commodities trading due to concerns that it could pose conflicts of interest and a risk to financial stability. Such pressures have resulted to a number of high-profile exits from the industry.