JPMorgan Chase (JPM) plans to sell or spin off its physical commodities unit, as regulatory scrutiny on big banks' commodities holdings and trading operations mounts.

The nation's largest bank said Friday afternoon that it has concluded an internal review and "is pursuing strategic alternatives" for the unit, which includes investments in energy and other commodities, as well as physical trading operations. Those alternatives could include an outright sale, a spin off or a strategic partnership for the business, JPMorgan said.

The bank's announcement comes at the end of a week when lawmakers and the media closely scrutinized big banks' investments in non-financial businesses, including oil refineries, aluminum warehouses and other commodities. A New York Times story last weekend highlighted banks' investments in such business and accused them of seeking to control the prices of certain commodities.

Senators on Tuesday called for increased transparency and oversight of the commodities operations at banks, including JPMorgan Chase, Goldman Sachs (GS) and Morgan Stanley (MS).

JPMorgan is also reportedly in talks to settle allegations of energy market price manipulation with the Federal Energy Regulatory Commission.

The bank said Friday that as it considers how to dispose of its commodities unit it will continue to run it "as a going concern and fully support ongoing client activities." JPMorgan Chase also said it remains committed to more traditional banking activities in the commodity markets, "including financial derivatives and the vaulting and trading of precious metals."

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