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Breakingviews: Not getting physical

Thursday, Mar 20, 2014 - 03:02

March 20 - JPMorgan is the latest bank to exit physical commodities trading, selling its business to Mercuria for $3.5 billion. Richard Beales and Antony Currie discuss the reasoning behind the trend.

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If you go in as the latest bank to get out of the business of trading physical commodities selling its business to of private critical we're curious to -- -- billion dollars. I'm first and -- you've been looking at this this isn't just the only thing it -- results out of banks are getting out of it what a driver of that well that their feelings -- -- -- -- my JPMorgan and other US banks. There is an issue. Trading and having physical commodities business. And that's because the Fed has to give -- an exception for red they have began to Mexico animal is standing for example off the crisis in the became next -- and we have -- networking. Action may do we don't want mr. Sutherland an elite banks that are important to the system should yankees -- -- -- actually owning metals that we've seen a few I suppose many scam that she's going to move Ganassi papal appointment to settle. And actions trading scandal rock is also typical spot uses them to read it. Some option offense at what is that one reason the technical side just looking across industry investments. It's become much that's -- business firstly let revenues are down 20% positive and -- secondly. Increased capital charges of fentanyl is what it means some -- hot -- -- I think you also put it out and apiece they -- you volumes distant commodities in general have shrunk massively against the billion -- now the pre crisis things work. Everybody was trading everything else they've cut an awful was actually that is what we look for investment banks they've moved out of me on on revenue he's all west that's known. No limits as the -- governor in mice that businesses and trading but especially on his. None of them breaks the revenue out but to accept it remains -- probably more than half in the past -- action since the -- of the rights of table -- -- -- when they sold another another bank still can -- -- derivatives -- country's -- is the only things -- -- this isn't this what does warehousing initiatives the pipelines that cuts so this is also just -- and so did -- you'll get a good price for this this. Well we think site but it's brief trip into an Internet site is the curious says -- meant that we have. Adequate revenue that's his Tenet of 98 million. Let's give buster palatable what's what's the cost of that good so that maybe is meant to be in government because -- -- -- a degree of like this is like that style and pure revenue shaking moments over and I'd -- it sounds -- it. Have got to say it with setting gets a three and a half million we have tested right -- them may be. The yet the profit the -- was making was about fifteen angels that was that that paying which is paying 25 times and it's winnable. What's notable and include trading at but it would still would make if you assumptions and number also the that we getting Clijsters or how much of this prices may not mean is from. Inventories that that change every day so it. It looks like at a decent price but it's such a black -- -- trading business that that -- -- with all this kind of taking us out in the don't let this moment. Okay thanks sensitive cells like. Probably a good deal. Jamie Dimon registered people. We'll be -- it will breaking news to work.

Breakingviews: Not getting physical

Thursday, Mar 20, 2014 - 03:02

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