Goldman Sachs ‘may sell’ Metro International

GOLDMAN Sachs has explored a sale of its metals warehousing business Metro International, three sources with knowledge of the matter said, just three years after the investment bank bought the firm for $550m.

Detroit-based Metro has attracted the scrutiny of regulators since Goldman took over the warehouse company in 2010, as companies such as Coca-Cola Co and other big metal consumers have accused it of distorting aluminum supplies. Goldman has consistently said Metro had not broken any laws or rules.

The sources said the bank had been happy with Metro’s performance. It had proven to be a lucrative money-spinner as stockpiles of aluminum had mounted in its global warehouse network.

Goldman might still decide to keep Metro, the sources said, but the bank has indicated it was ready to listen to any offers having already earned a sizeable return on its investment in the business.

“The bank would sell for the right price,” said one source with direct knowledge of discussions.

It is unclear whether Goldman has reached out to potential buyers. The sources asked not to be named as they are not authorised to speak on the matter.

A spokesman for Goldman Sachs declined to comment.

A sale may indicate Goldman is scaling back ambitions in its oncestoried commodities trading arm, where revenues have fallen about 90% since 2009 to just $575m last year, according to the bank’s annual report. After making up 15% of the banks’ total trading revenues in 2011, commodities fell to 3% last year.

Goldman and Morgan Stanley are also locked in discussions with the Federal Reserve over their right to keep owning and operating physical commodity assets such as warehouses, oil storage tanks and pipelines following their conversion to bank holding companies during the financial crisis.

Under US banking regulations, banks are usually barred from owning the physical commodity assets that they operate. The Fed has given Goldman and Morgan Stanley a five-year grace period — which expires in autumn — while it decides whether their long history of operating in these markets qualifies them for an exemption.

The purchase of Metro in 2010 was led by Goldman’s veteran commodities chief, Isabelle Ealet, and was designed to increase the bank’s presence in the physical metals market. Reuters