By David Henry and Anna Louie Sussman
NEW YORK (Reuters) - Blythe Masters, one of Wall Street's most powerful women, is leaving JPMorgan Chase & Co. after a 27-year career that began as an intern in London and concludes with the sale of the multibillion-dollar commodities business she built.
Masters, who turned 45 in late 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. Many observers had not expected her to remain with the business after its sale, although her future with JPMorgan was less clear.
She will take "time off" and "consider future opportunities," according to a memo bank executives sent to employees on Wednesday.
Once a rising star within JPMorgan and credited with having helped create credit derivatives in the early 1990s, Masters' career took a much rockier turn in recent years as she got caught up in a regulatory inquiry and struggled to extract profits from the commodities operation.
She began her career at JPMorgan as an intern in London before entering Cambridge University, where she studied economics. She joined the commodities desk in 1991 after graduating, and later moved to the bank's derivatives desk, where she was considered a derivatives wunderkind.
She is known for having been part of the team that pioneered structured finance instruments which others on Wall Street took to excesses that fueled the U.S. housing bubble and set up the financial crisis of 2008.
After serving for several years as chief financial officer of the investment bank, Masters took the reins of the commodities desk in 2006 as interim head.
While the bank had been a sizeable player in commodities in the 1990s, with a global oil trading division led at the time by Masters' ex-husband, Danny Masters, it hadn't delved as deeply into the sector as investment banks Goldman Sachs and Morgan Stanley , and had scaled back after facing regulatory scrutiny in metals markets toward the turn of the century.
That changed with the acquisition of Bear Stearns in March 2008, which gave the bank a large physical power and gas business for the first time.
With Masters at the helm, JPMorgan would go on to buy parts of UBS's commodity business after the Swiss bank decided to get out of the sector at the height of the financial crisis. That was followed by the jewel in the JPMorgan commodities crown, the purchase of physically-focused RBS Sempra in 2010.
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.
But 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 any wrongdoing, her name is referenced in the regulator's order a number of times. The bank neither admitted nor denied any violations in the case.
Meanwhile regulators were 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 considered a blockbuster billion-dollar business, was 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 the bumper returns earned by sector stalwarts Goldman and Morgan Stanley encouraged many other banks to expand into energy and metals trading.
(Additional reporting by David Sheppard in London; Editing by James Dalgleish)