JPMorgan Chase & Co has agreed to buy the non-U.S. assets of commodities joint venture RBS Sempra from Britain's Royal Bank of Scotland and Sempra Energy for around $1.7-billion in cash.
The U.S. bank, which has been growing its commodities arm aggressively in recent years, said on Tuesday it would take the RBS Sempra global oil, metals and European power and gas assets in a deal set to close in the second quarter.
JPMorgan had initially been in talks to buy the whole of the joint venture, but U.S. plans to stop proprietary trading by banks prompted it to review its strategy and leave behind RBS Sempra's North American power and gas assets - an area where the bank is strong after its 2008 acquisition of Bear Stearns.
RBS Sempra will retain those businesses, and partners RBS and Sempra Energy remain in talks over "strategic options" on their future. Sempra Energy, which could now take full control of the U.S. power and gas assets, has appointed JPMorgan as its adviser as it reviews alternatives.
Traders at RBS Sempra - 49 per cent owned by Sempra Energy, with RBS owning 51 per cent - welcomed the news after months of uncertainty that prompted a string of staff departures.
"It's lovely to have some news after four months of knowing nothing. It all looks promising," said a trader at RBS Sempra. "I wouldn't expect any job losses... This will be a complement and (it) takes us into a different league."
Part-nationalized RBS has been forced to slim down and sell off a string of assets including its stake in joint venture RBS Sempra to appease European Union antitrust concerns after it received billions in state aid during the financial crisis.
The sale of a major part of its Sempra venture marks a key step forward for RBS, which has signalled it wants to move quickly to put the past, and uncertainties related to the sales, behind it.
Sempra Energy said its share of the sale proceeds was expected to be around $940-million, with RBS set to reap the remaining amount.
JPMorgan is keen to expand its commodities arm, run by Blythe Masters, who has said she wanted the bank to become a top-tier franchise globally.
Snapping up a large part of RBS Sempra will boost its aim of taking on the top three commodities firms, Goldman Sachs, Morgan Stanley and Barclays.
JPMorgan shares climbed 30 cents in premarket trading to $39.25 from $38.95 on Friday.