JP Morgan Chase may exit European energy business

JP Morgan Chase has lost nine of its energy derivatives traders, fuelling speculation that the US investment bank may close its energy operations, at least in Europe, following widespread cost-cutting and restructuring.

Six of the traders have left to join Japan’s Mitsui & Co in London, with another joining Mitsui in Sydney. The defectors have set up an energy derivatives unit at Mitsui, headed by Hiroshi Hayakawa, JP Morgan’s former head of energy derivatives trading for Asia and Europe. The new business, Mitsui & Co Energy Risk Management, will market derivatives for crude oil, gasoline, kerosene and natural gas, and has additional offices in Tokyo and New York.

"We presently have 16 professionals working for the new trading business, with seven from the heritage JP Morgan Chase energy derivatives desk. We expect to double our team numbers within the next few months and, although we are still awaiting regulatory approval, we should be up and running globally in July,” Hayakawa told RiskNews. ”Mitsui is already strong in the metals and agricultural futures markets, so extending its reach into energy makes good business sense.”

Richard Breton becomes Mitsui’s head of marketing for Europe; Scott Davies will work as Mitsui’s senior energy trader; Jonathan Stevens joins Mitsui as an energy trader; Lisa Wynne becomes an energy derivatives marketer and Cormac McCarthy joins as Mitsui’s head of energy risk management. All six held similar positions at JP Morgan Chase. Jon D'Angelo, JP Morgan’s head energy trader for Asia, joins Mitsui in Sydney as a senior energy trader.

Separately, Keith Murphy will join Mitsui in New York as head energy marketer for the Americas. Previously he was head marketer at AIG Energy Trading in New York and until 1998 was a JP Morgan Chase managing director of commodities. Hayakawa also said he expects to hire two or three energy professionals in the near future, although he refused to disclose names.

Meanwhile, French bank BNP Paribas scooped up two JP Morgan Chase energy traders. Larry Felske joined BNP’s commodity-indexed transactions group as a director of natural gas options trading in New York, and Olivier Knight joined BNP’s London desk as an oil products derivatives trader.

JP Morgan exited the energy markets four years ago. But when it merged with Chase Manhattan, it inherited Chase’s energy team, which included Hayakawa and his colleagues.

“JP Morgan Chase might be looking to exit the market due to all the uncertainty over so-called ‘wash trades’, where energy prices are controlled artificially to boost trading volumes,” said one London-based investment banker who wished to remain anonymous.

JP Morgan Chase was not immediately available for comment.