UPDATE 2-Goldman to sell uranium trading desk as Fed review looms

Fri Nov 22, 2013 4:01pm EST
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By Scott DiSavino and David Sheppard

NEW YORK/LONDON Nov 22 (Reuters) - U.S. bank Goldman Sachs Group Inc has put its uranium trading business up for sale, a source familiar with the matter said on Friday, the latest sign that Wall Street's most storied commodity trader is paring back parts of the business.

The move comes as other U.S. banks, including JPMorgan Chase & Co and Morgan Stanley, look to exit physical commodity trading in the wake of increased government scrutiny, squeezed trading margins and forecasts for tepid demand in certain markets.

Goldman Sachs executives have been resolute that their J. Aron commodity unit is a "core" part of the bank's offering to clients. However, political and regulatory pressure has mounted, and this week a source said the bank is considering selling its controversial metals warehouse arm.

Goldman's two-person uranium desk, which it inherited with the purchase of U.S. utility Constellation Energy's London-based trading operation in 2009, is among just a half-dozen major traders in the niche physical market for uranium, according to an industry source at a rival firm.

The bank's presence has diminished in recent months, although it remains active on a daily basis, the source said.

Other traders include Japanese trading companies Marubeni Corp and Itochu Corp, Canadian uranium miner Cameco Corp's Nukem unit, Deutsche Bank AG, and the North American unit of privately held, Luxembourg-based metals and mining trading firm Traxys.

The source said it would likely be difficult for Goldman to sell the business to any firm other than another bank, likely a foreign one, due to the dependence on ultra-low interest rates to back long-term contracts and stockpiles.   Continued...