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JPMorgan Chase & Co. has cut ties with dozens of base metals clients and reduced bankers’ bonuses following last year’s nickel crisis, Bloomberg reported, citing people familiar with the matter.
The bank’s metals business has been under internal scrutiny after the London Metal Exchange (LME) suspended nickel trading due to the metal’s price surge attributed to China’s Tsingshan Holding Group buying large amounts of nickel.
JPMorgan has made deep cuts among privately-owned Chinese firms, with several base metals clients cut in Asia. However, the bank will continue to work with a few large, long-standing clients in the region. The bank’s base metals team is also under increased internal scrutiny, and bonuses for many have been cut.
The review is ongoing, and JPMorgan’s appetite for risk-taking in metals has been curtailed. The bank’s retreat comes amid a challenging environment for the metals world, with high-interest rates, wild price swings, and liquidity scandals.
An industry-wide trend?
While JPMorgan has not commented on the reported job cuts or its metals business restructuring, the move is part of a broader trend in the financial industry.
Many banks and financial institutions have recently scaled back their commodities trading activities due to increased regulatory scrutiny and lower profits.
The key takeaway is that JPMorgan is taking steps to refocus its business and cut costs amid a challenging market environment. The bank’s efforts to reduce its exposure to nickel and other metals may also indicate that it is rethinking its commodities business strategy.
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