Oct 11 (Reuters) - JPMorgan Chase & Co kept its
commodity trading risk unchanged in the third quarter from the
previous three months, as the bank prepares to exit physical
commodities trading, results from the largest U.S. bank showed
Value-at-Risk (VaR) in commodities at JPMorgan stood at $13
million in the third quarter, flat with the second quarter and
also unchanged from the third quarter of 2012.
The bank is in the process of selling its physical commodity
arm in the face of rising regulatory pressure. JPMorgan
circulated the offering documents to potential buyers this week,
valuing the assets at $3.3 billion, with annual income of $750
In its earnings release, the banks said physical commodities
was one part of the bank that was either "non-core" to its
customer or carried "outsized operational risk."
JPMorgan, typical of Wall Street banks, groups its
commodities revenue under the fixed income category and does not
break down the sector individually, often leaving VaR as one of
its key risk-reward indicators for commodities.
For the third quarter, JPMorgan said fixed-income revenue
fell to $3.4 billion, down by 8 percent from a year earlier.
The bank as a whole reported a $400 million loss for the
third quarter, as the biggest U.S. bank by assets tried to put a
number of costly legal settlements behind it.
That included a $410 million settlement with the U.S.
Federal Energy Regulatory Commission in July, over allegations
of market manipulation in U.S. power markets. The settlement
with FERC came shortly after the bank announced it was exiting
physical commodities trading
The bank said it had about $23 billion in reserve for
fighting and settling legal disputes.