JP Morgan Chase & Co announced that they plan to step out of the business of trading and owning physical commodities which range from oil to metals. The decision came days after being questioned by a congressional panel regarding bank ownership being used to influence and manipulate markets. JP Morgan Chase & Co said that they are now in negotiations with the Federal Energy Regulatory Commission regarding a US$400 million settlement.
JP Morgan plans to spin off or sell its holding which includes stakes in power plants, warehouses and traders in materials like power, gas and coal. The largest US bank estimated the value for the physical commodities was tagged at US$14.3 billion.
"We considered many different factors, including the impact of potential new rules and regulation," said Brian Marchiony, a spokesman for the bank.
US banks are now facing regulatory and political pressure regarding their global commodities business. The Federal Reserve announced that they will review the decade-old decisions regarding commodities owned by banking institutions.
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