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 Masters, who turned 45 in March, will leave the bank in a few months
after assisting with the sale of its physical energy and metals
business to Swiss merchant Mercuria.
She will take time off and "consider future opportunities,"
according to a memo bank executives sent to employees on Wednesday.
A Cambridge graduate and avid equestrian, Masters was part of a team
that pioneered structured finance instruments in the early 1990s.
After a decade in trading and corporate roles, she took over the
fledging commodities business in 2007. She embarked on a series of
acquisitions built Wall Street's biggest commodities desk with
revenue exceeding $2 billion in 2012.
Her career hit a few road bumps in recent years. Some criticized her
role in developing credit products that fueled the U.S. housing
bubble that burst in the financial crisis of 2008. Last year, she
got caught up in a regulatory inquiry that ultimately cost the bank
more than $400 million.
Her exit comes at a time when commodities earnings have been
shrinking across the financial sector.
Colleagues called her smart and competitive, respected by senior
executives and valued by CEO Jamie Dimon. But she could be a
divisive figure, demanding and combative at times, according to
interviews with people who have worked for her.
One colleague called Masters "brilliant" and "inventive", but said a
corporate management role was not an ideal fit for her. Many expect
her to enter a less-regulated area such as private equity or hedge
fund management.
"A number of the large private equity houses are on the prowl to add
commodity trading to their suite of investor products," said George
Stein, managing director of New York-based recruiting firm Commodity
Talent LLC.
"A professional like Blythe Masters who built the largest Wall
Street commodity trading house by revenue is going to find serious
interest among the biggest players."
Her ex-boss Michael Cavanagh, formerly co-head of JPMorgan's
corporate and investment bank, left at the end of March to become
co-president and co-chief operating officer at private equity firm
Carlyle Group. <CG.O>
DERIVATIVES PIONEER
Masters started at JPMorgan as an intern in London, then entered
Cambridge University to study economics. She joined the commodities
desk in 1991 after graduating, and later moved to the derivatives
desk, where she was considered a wunderkind.
In 2006, after several years as chief financial officer of the
investment bank, Masters became interim head of the commodities
desk.
The bank had been a sizable player in commodities in the 1990s,
with a global oil trading division led at the time by Masters'
then-husband, Danny Masters. But it had not delved as deeply into
the sector as investment banks Goldman Sachs <GS.N> and Morgan
Stanley <MS.N>, and had scaled back after facing regulatory scrutiny
in metals markets.
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That changed in March 2008, when the acquisition of Bear Stearns
gave the bank a large physical power and gas business.
"The idea that commodities as an asset class is finished is just
fundamentally flawed," Masters said in a 2008 interview with
Reuters.
With Masters at the helm, JPMorgan bought parts of UBS's <UBSN.VX>
commodity business after the Swiss bank decided to get out of the
sector. The 2010 purchase of physically focused RBS Sempra was the
jewel in JPMorgan's commodities crown.
By August 2010, Masters was telling employees that Goldman and
Morgan Stanley should be "scared" of JPMorgan's newly-expanded
commodity operation, Bloomberg reported at the time.
SECTOR TURNS
More recently, regulatory problems began to pile up. In 2013, the
bank paid $410 million to the Federal Energy Regulatory Commission
to settle allegations of power market manipulation in California.
While Masters was not cited for wrongdoing, her name appeared in the
regulator's order a number of times. A confidential 70-page
regulatory document cited her supposed "knowledge and approval of
schemes" carried out by a group of energy traders in Houston, and
claimed that Masters had "falsely" denied under oath her awareness
of the problems, the New York Times reported in May 2013. The bank
neither admitted nor denied any violations in the case.
In July 2013, the bank's ownership of its Henry Bath metals
warehousing unit came under scrutiny at a Senate Banking Committee
hearing.
Regulators have been turning a sharper eye on all of Wall Street's
involvement in the raw materials supply chain, with the Federal
Reserve questioning whether commercial banks like JPMorgan should be
allowed to trade physical commodities.
Commodities trading, once a blockbuster business, has been
shrinking. Total commodity trading revenues on Wall Street have
fallen by about two-thirds in the last five years, with the top 10
banks notching just $4.5 billion last year, according to a report by
Coalition, a UK financial analytics firm.
That is down from more than $14 billion at its peak in 2008, when
bumper returns at sector stalwarts Goldman and Morgan Stanley
encouraged other banks to expand into energy and metals trading.
(Additional reporting by David Henry and Jeanine Prezioso in New
York, David Sheppard in London; editing by James Dalgleish and David
Gregorio)
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