Trading scandal boss: we were 'dead wrong'

  • @mrjamesashton

The boss at the centre of the City's latest trading scandal admitted yesterday he was "dead wrong" to dismiss concerns about the bank a month earlier.

Jamie Dimon, the chief executive of JP Morgan Chase, which last week uncovered a shock £1.2bn trading loss, said his bank reacted badly to warning flags that it had large losses in financial derivatives trading.

"We got very defensive. And people started justifying everything we did," Mr Dimon said in an interview on US television network NBC. "We told you something that was completely wrong a mere four weeks ago."

Mr Dimon, pictured, who had been lauded for steering JP Morgan out of the financial crisis, said in April that the concerns were a "tempest in a teapot".

Last week he was forced to admit that one of London's highest-paid traders had racked up huge losses, an admission that sent his firms' share price tumbling by 10 per cent.

The source of the losses was French-born Bruno Michel Iksil, nicknamed The London Whale because of the size of the giant bets he took. Rumours that the bank had overstretched itself were played down when analysts quizzed Mr Dimon on the subject.

Mr Dimon did not explain in the NBC interview why the trades went wrong. "The strategy we had was badly vetted," he said. "It was badly monitored. It should never have happened."

The incident has handed fresh ammunition to politicians who are keen to limit investment banks' riskier activities. A new piece of regulation known as the Volcker rule aims to prevent US banks from certain kinds of trading for their own profit. It is similar to the Banking Reform Bill in last week's Queen's Speech, which will ringfence a British bank's retail operations from so-called "casino" banking activities.

However, Mr Dimon, an outspoken critic of the changes, said that Mr Iksil's trades would not have fallen under the rule. "This is a very unfortunate and inopportune time to have had this kind of mistake," he said. "We hurt ourselves and our credibility. We have got to fully expect and pay the price for that."

Bankers at JP Morgan fear as much as 50 per cent could be wiped off their bonuses this year as a result of the scandal. The firm split a £5.8bn pay and bonus pot last year between 26,000 staff – worth an average of £223,000 each.

Mr Dimon is scheduled to speak again on Tuesday when JP Morgan holds its annual shareholders' meeting in Florida.