You are here
JPMorgan Chase raises its recent trading loss to US$4.4 billion
JPMorgan Chase has more than doubled its estimate of recent losses from trading in complex financial derivatives to USUS$4.4 billion. The US bank said the executives responsible had been dismissed without severance pay and the bank would be clawing back two years of their pay. Despite the revelation, JPMorgan also reported a surprisingly strong three-month net profit of US$4.96 billion.
The bank’s shares rose more than five per cent on the news in New York morning trading. The profit figure for the three months to 30 June was down 8.7 per cent from the same period last year, but was nonetheless much higher than analysts’ expectations. When the Wall Street firm first announced the loss at its chief investment office in May, it said it amounted to at least US$2bn.
The bank also said it had found evidence that some traders may have been trying to hide their losses. JPMorgan said it would restate its results from the previous three months because it had made US$459 million less than it thought. It blamed the restatement on the fact that “certain individuals may have been seeking to avoid showing the full amount of the losses in the portfolio during the first quarter.”
Chief executive Jamie Dimon said he had closed the division of the bank responsible for the losses and moved the remainder of the trading position to its investment banking division. The executive in charge of the closed division, Ina Drew, left the bank in May, days after the losses were announced.
The bank said it would claw back as much remuneration as possible from the individuals deemed responsible for the losses, equivalent to about two years’ worth of pay. Before Friday’s gains, JPMorgan had lost about 15 per cent of its market value since the losses were first announced. It also said that it expected another US$700 million to US$1.7 billion of losses from the derivatives trading.
User comments posted on this website are the sole views and opinions of the comment writer and are not representative of Guardian Media Limited or its staff. Guardian Media Limited accepts no liability and will not be held accountable for user comments.
Please help us keep out site clean from inappropriate comments by using the flag option.
Guardian Media Limited reserves the right to remove, to edit or to censor any comments. Any content which is considered unsuitable, unlawful or offensive, includes personal details, advertises or promotes products, services or websites or repeats previous comments will be removed.