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.

BBC