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The Wall Street Journal is reporting today (Feb. 15) that JP Morgan Chase is expected to announce as early as tomorrow (Feb. 16) that it has agreed to pay $1.7 billion for the less juicy parts of RBS Sempra Commodities, the commodities trading operation run by troubled Royal Bank of Scotland and San Diego's Sempra Energy. The more valuable North American part of the business will be excluded, but remains for sale, according to the Journal. JP Morgan originally wanted to buy the whole operation, but the Obama administration has proposed reforms that could force large banks to get out of proprietary trading operations such as RBS Sempra, says the Journal. While the Obama proposal has not become law, the prospect apparently frightened JP Morgan.

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Comments

a2zresource Feb. 19, 2010 @ 10:12 p.m.

There is an interesting story in how an Enron commodities trading unit became Sempra Energy, and how Sempra Commodities then became part of RBS Sempra Commodities (http://public.sempra.com/newsreleases/viewpr.cfm?PR_ID=2186&Co_Short_Nm=SE).

In 2000 during the great California electricity crisis, SDG&E vehemently denied being involved in any electricity feedback loops where cheap California electricity was sold out of state and repurchased here at inflated prices... and SDG&E was probably right. It didn't have to be involved as long as its parent Sempra Energy had its division Sempra Commodities to handle the dealings. Remember the SIMPLY STATED: SEMPRA ENERGY 2000 ANNUAL REPORT comments on page 6 regarding Sempra's sophistication in making trades of the greatest complextity, along with its prediction that by 2003 a third of Sempra Energy income would be from unregulated business transactions.

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Don Bauder Feb. 20, 2010 @ 8:20 a.m.

Response to post #1: You make excellent points. Yes, Sempra boasted that it would boost its unregulated business. RBS Sempra Commodities was a major step in that direction. The diversification into unregulated businesses has been a flop for most utilities. Sempra's seemed to be working; it was supplying a large percentage of corporate profits. What's going on here? Best, Don Bauder

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a2zresource Feb. 26, 2010 @ 12:41 p.m.

RE #2:

I have had a deep suspicion for awhile now that RBS Sempra Metals being a leading trader at the Dubai Gold & Commodities Exchange, where Royal Bank of Scotland is also the lead underwriter of Dubai World debt and Sempra Energy's main partner in RBS Sempra Commodities, has more than a little bit to do with the profitability of Sempra Energy's non-utility unregulated businesses.

Conclusive evidence that RBS Sempra Metals is a purchaser of conflict gold smuggled out of the Congo through Uganda is hard to come by, but it would make for a good accounting for some portion of roughly $300 million annually in smuggled nuggets in that commodity pipeline.

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Don Bauder Feb. 27, 2010 @ 1:44 p.m.

Response to post #3: That's quite a charge. If true, somebody should go to jail -- but probably won't. Best, Don Bauder

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