Losses by JPMorgan's London traders soar to $5.8bn

Bank makes $5bn profit despite bad bets that fuelled criticism of the City

The City's reputation suffered another blow yesterday as JPMorgan revealed a sharp escalation in losses from the activities of some of its London traders.

Bets on credit placed by the bank's London-based Chief Investment Office (CIO) racked up losses of $4.4bn (£2.8bn) between April and June, more than twice the initial estimate of $2bn. Combined with first-quarter losses of $1.4bn, the total stands at $5.8bn.

Jamie Dimon, the chief executive, admitted that the bank "had shot itself in the foot". He said an internal investigation had raised questions about the values that traders placed on certain bets, and that the traders may have sought to mask losses.

Ina Drew, the so-called "Queen of Wall Street" who had responsibility for the unit, quit as a result of the affair, and Mr Dimon said she had offered to give back pay. The traders responsible, who have been fired, will also lose up to two years' money.

Further losses of up to $1.7bn are possible, but overall JPMorgan still made profits of $5bn, down 7 per cent, in the second quarter. The bank saw a $2.1bn reduction in bad debt write-offs and gained $1bn from equities held in the CIO.

The three London-based bankers at the heart of the affair, including Bruno Iksil, the so-called London whale, left JPMorgan recently.

Mr Iksil and his immediate bosses, Achilles Macris and Javier Martin-Artajo, were suspended from trading when the losses were discovered in May, but stayed to help unwind the positions. All three remain on the Financial Services Register of authorised people.

Mr Dimon, who has been called before Congress twice in recent months, said that the part of the bank where the losses mounted up, the synthetic credit group in the CIO, has been closed down.

He told investors: "These kind of events are terrible but we have had hundreds of people working around the clock to get this thing hustled down and hopefully we will be a better company for it. We are not proud of this moment but we are a very proud of the company. We are not making light of this error but we believe this is an isolated event."

Mr Dimon denied that his bank had become too big to manage. But his traders have given further ammunition to critics of the City of London who are fuming over the Libor interest rate fixing scandal which cost Barclays £290m in fines. Around 20 global banks remain under investigation and more fines are expected.

Critics have been given further ammunition by a recent su rvey by the US whistleblowers' law firm Labaton Sucharow which found that one in four London finance professionals believe "financial services professionals may need to engage in unethical or illegal activity to get ahead".

Asked if the JPMorgan trading scandal would be another blow to London's reputation, the longtime City commentator David Buik, from Cantor Index, said: "How can it not be? It is appalling by any standards. There is a regulation, a compliance or a credit problem or all three."

From the opposite side of the political divide, Brendan Barber, the TUC's general secretary, said: "The recent banking scandals show that there has not just been poor regulation in the City, but a far greater cultural failure of bonus-fuelled greed and short-termism that has turned the City into an industry that serves itself and has wrecked the rest of the economy."

Suggested Topics
News
people
News
people And here is why...
News
peopleStella McCartney apologises over controversial Instagram picture
Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
PROMOTED VIDEO
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
News
i100
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
News
people
News
The village was originally named Llansanffraid-ym-Mechain after the Celtic female Saint Brigit, but the name was changed 150 years ago to Llansantffraid – a decision which suggests the incorrect gender of the saint
newsWelsh town changes its name, but can you spot the difference?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Kristen Scott Thomas in Electra at the Old Vic
theatreReview: Kristin Scott Thomas is magnificent in a five-star performance of ‘Electra’
News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
peopleAt the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Life and Style
Couples who boast about their relationship have been condemned as the most annoying Facebook users
tech
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Time to stop running: At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity

Time to stop running

At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Arsenal vs Galatasaray: Five things we learnt from the Emirates

Arsenal vs Galatasaray

Five things we learnt from the Gunners' Champions League victory at the Emirates
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence