JP Morgan botched bets lose £3.7bn
Friday 13 July 2012
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.
- 1 Scarlett Johansson new band 'already hit with legal complaint' from another The Singles
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Husband and wife die holding hands within hours of each other after 67 years of marriage
Mohammed Emwazi: Nine things we know about Isis militant 'Jihadi John'
What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
'Jihadi John': Mohammed Emwazi – from British computer programmer to Isis executioner
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Oscars 2015: Birdman beats Boyhood as Eddie Redmayne and Patricia Arquette win big - as it happened
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
This is what it's like to be dead, according to a guy who died for a bit
iJobs Money & Business
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...
£22,000 - £23,000: Beverley James: Are you looking for the opportunity to work...