LONDON Feb 20 JPMorgan Chase & Co's
commodity revenues fell 12 percent last year, the bank said in a
filing on Thursday, shedding new light on the unit as the bank
prepares to sell its physical trading arm to Swiss-based trader
The drop in commodity revenues at JPMorgan is the second in
two years, and follows tighter restrictions across Wall Street
on banks trading with their own money and growing scrutiny of
their role in the natural resources supply chain.
It said principal transaction revenues in commodities were
$2.073 billion in 2013, down from $2.363 billion the previous
year and $2.823 billion in 2011, the bank said in its annual
10-K filing with the U.S. Securities and Exchange Commission. A
bank spokesman declined to comment on the figures.
While the data offer a rare glimpse into the bank's large
oil, gas, power and metals trading business, they are not
considered a definitive indicator.
The revenues don't include the cost of operating its
commodities trading operation, which has numbered as many as 600
staff in 10 offices globally. The figures also do not
distinguish between the physical trading team that JPMorgan is
selling and the derivatives activities that it will keep.
Banks also say accounting differences mean the outright
numbers are not a complete reflection of how they operate their
commodity businesses. No Wall Street firm declares the exact
profit or loss of individual trading operations.
But in commodities, the trajectory has been clear. Total
commodity trading revenues on Wall Street have fallen by about
two-thirds in the last five years, with the top 10 banks
notching just $4.5 billion last year, according to London-based
analytics firm Coalition.
JPMorgan announced last summer it was selling its vast
physical commodities operations, shortly after reaching a $410
settlement with energy regulators in the United States over
allegations the bank had manipulated electricity markets.
Mercuria, a private commodities dealer run by two former
Goldman Sachs oil traders, entered exclusive talks with the bank
to buy its physical business two weeks ago. JPMorgan has valued
the business at $3.3 billion in documents circulated to
The deal value has yet to be agreed and will depend to a
large extent on the valuation of large stockpiles of oil and
metals the bank holds, one source said.
At the end of last year, the bank held $10.2 billion in
physical commodities, according to the SEC filing, down from $16
billion at the end of 2012. That includes precious metals like
gold and platinum that will not be included in any sale.
While the bank is halting its trading of physical oil
cargoes and industrial metals, it will continue to trade
financial commodity contracts and precious metals for clients.