Canada's Bank of Nova Scotia is exploring options for its gold business ScotiaMocatta, the Financial Times reported, which include a possible sale of Canada's most popular precious metals trader. Scotiabank made a decision to sell ScotiaMocatta following a massive money laundering scandal centered on a U.S. refinery that involved smuggled gold from South America. The ScotiaMocatta business, a mainstay in PM trading, is one of London's main gold trading banks and is being sold by JPMorgan.
According to the FT sources, ScotiaMocatta's future had been underway for several months, with ScotiaBank allegedly seeking a buyer for up to a year and was likely to shrink the business if a sale is not completed, although according to the article Chinese buyers - the world's dumbest money these days - are rumoured to be the key targets of the sale.
While gold trading has been in a cyclical decline in recent years, the "straw that broke the camel's back" in prompting the sale was Scotiabank's lending to Elemetal, a precious metals refinery in Dallas. Scotiabank was one of its biggest lenders, they said. The problem emerged in March, when US prosecutors accused workers at a subsidiary of Elemetal, NTR Metals in Florida, of a money laundering scheme using "billions of dollars of criminally derived gold" mostly from Peru.