Wall Street supremo Jamie Dimon has admitted last year was “the most painful, difficult and nerve-wracking experience I have ever dealt with professionally” as JPMorgan's was hit by legal costs and fines.
In a 31-page letter to shareholders Dimon wrote: “Tough as the year was — the company was under constant and intense pressure — I can hardly express the admiration, even pride, I feel because of the enduring resolve and resiliency of our management team and our employees.”
He said JPMorgan had been hit with $8.6 billion (£5.1 billion) of fines and settlements last year over the “London Whale” trader scandal and its involvement in the mortgage-backed securities crisis which precipitated the financial crisis of 2008.
It also emerged that his own pay package dropped 37% last year to a mere $11.8 million as all executives took big cuts to reflect the fines and penalties.
Dimon told shareholders: “We thought the best option, perhaps the only sensible option … was to acknowledge our issues and settle as much as we could all at once, albeit at a high price.”
But he also held back on what he learned, adding: “More distance and perspective are required.”
Taking a literary bent he said: “When I look back at our company last year with all of our ups and downs, I see it as A Tale of Two Cities: ‘It was the best of times, it was the worst of times.’ We came through it scarred but strengthened — steadfast in our commitment to do the best that we can.”
Dimon also spelt out in some detail how the bank will have to spend an extra $2 billion complying with new and stricter regulations for banks across the world. He said that by the end of this year it will have taken an extra 13,000 JPMorgan employees since the start of 2012 just to deal with extra regulatory compliance and risk control. Some 8000 staff are now dedicated to combating money laundering for which the bank was heavily criticised by regulators last year.
Dimon said the bank had suffered from a tin ear. He said: “We had started to see regulatory and enforcement actions against our competitors — and saw signals from our regulators that things were going to get tougher.
“Our response generally was, ‘We know what we’re doing’. Well, we should have done more self-examination.”