Goldman Says ‘Formal Sales Process’ Started for Metro Unit

May 20, 2014 4:15 pm ET

May 20 (Bloomberg) -- Goldman Sachs Group Inc. said it has begun the process to sell Metro International Trade Services LLC, the metals warehouse business purchased by the bank in 2010.

“Metro is not strategic to our client activities, and the firm has concluded that this is the right time to explore a sale, given recent interest by potential buyers,” Michael DuVally, a Goldman Sachs spokesman, said in an e-mailed statement today. “A formal sales process has begun.”

Barclays Plc, JPMorgan Chase & Co. and Morgan Stanley are scaling back their raw-material businesses. Commodity revenue at the 10 largest banks fell 18 percent last year amid reduced volatility, Coalition, a London-based analytics company, said in February. Regulators are concerned that lenders might be able to wield control over prices, or suffer losses that would endanger the financial system.

The Standard & Poor’s GSCI Spot Index of 24 commodities posted its worst year in five in 2013 as gold fell the most since 1981 and corn, arabica coffee and wheat slid at least 20 percent. Commodity-related assets under management shrank by about $100 billion, or about 25 percent of the total held at the year’s start, Barclays estimated in February. The GSCI index rose 3.5 percent this year.

Goldman received inquiries from potential buyers in November after the London Metal Exchange proposed new rules on how storage facilities operate, a person briefed on the matter said at the time. The LME postponed implementation after the plan, intended to ease aluminum bottlenecks at warehouses, was tossed out by a judge. This month, the LME was granted permission to appeal the ruling.

Consumers of metals including brewer MillerCoors LLC complained that lengthy waits for stockpiled supplies inflated costs.

--With assistance from Michael J. Moore in New York.