New York investment bank Morgan Stanley is engaged in discussions with Qatar Investment Authority to dispose of a majority stake in its commodities unit.
Sources familiar with the matter told Financial Times that the bank had earlier planned to sell a minority stake in the business, which trades in trading oil, gas and electricity derivatives.
Morgan Stanley commodities business co-head Simon Greenshields was quoted by the news agency as saying, "Commodity markets provide little opportunity for agency transactions, and customers depend upon the participation of large liquidity providers that are able to manage principal risk."
The possible deal, still in initial stages, is also likely to be part of a strategy of James Gorman, chief executive of the bank, to revive the firm by building up its retail brokerage and wealth management businesses.
The sale of the aforesaid stake to Qatar’s sovereign wealth fund will provide the optimum capital and synergy to comply with the new financial rules, such as the US Volcker rule.
The upcoming proposed Volcker rule is designed to ban banks from carrying out installment loans, residential mortgages, equity credit loans, deposit services as well as continue trading on behalf of their own books.
Morgan Stanley, one of the first to trade in oil derivatives, currently deals in physical commodities and commodity-linked derivatives.
Colorado-based petroleum pipeline operator TransMontaigne, including several other oil storage facilities and power plants are owned by the US bank, as reported by the news agency.