JP Morgan botched bets lose £3.7bn
The losses racked up by disastrous trades at the London office of America's biggest bank nearly trebled to £3.7 billion, it emerged today.
JP Morgan Chase said a series of botched bets designed to hedge against other investments had created losses of 5.8 billion US dollars over the first half of 2012, much higher than its previous estimate of two billion US dollars.
The bank today revealed that three senior traders associated with the losses - believed to be one known as The London Whale and two other senior managers in London - have followed chief investment officer Ina Drew out the door.
The trades had accounted for losses of 1.4 billion US dollars (£905.1 million) in the first quarter and 4.4 billion US dollars (£2.8 billion) in the second quarter, the bank said.
They contributed to a 400 million US dollar (£258.6 million) fall in second quarter net income to 5 billion US dollars (£3.2 billion) at the bank today.
And the bank revised down its earnings for the first quarter by 459 million US dollars (£296.8 million) amid claims some of its traders may have been trying to hide the full extent of the losses.
The London Whale has been widely reported to be French-born Bruno Iksil, who gained his nickname because of the size of the positions he took.
He was understood to be one of the best paid traders in the City and commuted to London from Paris on a weekly basis.
Insiders at JP Morgan Chase have stressed he is not a rogue trader, but one of a team whose strategy went wrong.
The trading losses are an embarrassment for the bank that came through the 2008 financial crisis in much better health than its peers, steering clear of risky investments that hurt many others.
Chief executive Jamie Dimon had originally dismissed concerns about the bank's trading as a "tempest in a teapot".
But he said today that the episode had "shaken our company to the core", adding: "We shot ourselves in the foot."
Its shares have lost about 15 per cent of their market value since the loss was revealed.
Its shares rose about 3 per cent today after its results came in better than the City had feared, triggering a rally for banking stocks in the US.
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