July 16, 2013 (TSR-Reuters) – JPMorgan Chase & Co is following a move by rival Goldman Sachs Group Inc to explore sales of its metal warehouse business, the Financial Times said on Sunday.
Citing people familiar with the matter, the newspaper said on its website on Sunday that both U.S. banks have in recent months informally started to seek potential buying interest for their warehouse units.
A Goldman spokesman said the firm has no comment. A spokeswoman at JPMorgan did not immediately return calls for comment.
In April, Reuters first reported Goldman has explored a sale of its metals warehousing business Metro International LLC, just three years after the investment bank bought the firm for $550 million.
A proposed rule change by the London Metal Exchange (LME) to relieve bottlenecks that slow metal delivery out of warehouses could cut into profits for the metal warehouse industry, the FT said.
Sources told the FT that JPMorgan has recently started a sales process for its warehousing unit, Henry Bath, although the discussions began before the LME’s rule change proposal.
JPMorgan has also discussed sales of some of its physical metal trading book, although there is no direct connection between the two deals, the FT said.
Several U.S. banks including Goldman are locked in discussions with the Federal Reserve over their right to keep owning and operating physical commodity assets like warehouses, oil storage tanks, and pipelines following their conversion to bank holding companies during the financial crisis.
Under U.S. banking regulations, banks are usually barred from owning physical commodity assets that they operate.
