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JPMorgan sells physical commodities unit to Mercuria

Staff writer |
JPMorgan is selling its physical commodities business to Mercuria for $3.5 billion. The all-cash transaction for one of the most powerful oil and metals desks on Wall Street is expected to close in the third quarter.

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JPMorgan had valued its physical commodity business at $3.3 billion, with an annual income of $750 million. JPMorgan paid nearly $2 billion to buy the largest part of the business from RBS in 2010. JPMorgan decided to sell its multi-billion dollar physical commodities division so it could concentrate on the bank's core business of lending.

JPMorgan said it would still provide traditional banking activities in commodities markets, including financial products and the vaulting and trading of precious metals.

It gave no further details of what exactly would be included in the transaction, but a source close to the matter said the bank's metal brokerage business including its London Metal Exchange (LME) ring dealing team would remain with JPMorgan.

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