'Whale' to sink bank's bonuses
London trader's $2bn losses are expected to force JP Morgan to reduce this year's financial rewards
Bankers at JP Morgan fear that as much as 50 per cent could be wiped off their bonuses this year as a result of Thursday's "London Whale" trading scandal.
The US giant had emerged relatively unscathed from the financial crisis and paid 26,000 bankers a pay and bonus pot of £5.8bn last year – £223,000 each.
However, last week it emerged that it had not escaped the worst excesses of the credit crunch, when it was confirmed that London-based Bruno Michel Iksil was behind trades that led to at least $2bn (£1.2bn) of losses.
The revelations are also expected to lead to questions over the chief executive Jamie Dimon's $23m package for 2011 at Tuesday's annual shareholder meeting.
Mr Iksil was nicknamed both the London Whale and Lord Voldemort due to the size of his bets and his power in the market after taking financial positions amounting to $100bn.
Senior JP Morgan bankers said they feared that the losses would result in heavy cuts to their bonuses. The bank pays out from a pot across the group, rather than paying out on the successes by division.
One senior rainmaker said: "This will all get tied up into what we get paid, as it will obviously impact our year-end results. We're all disappointed, not least because of doing such an incredible job of getting through the crisis in a way that built us a reputation as very astute risk managers."
Another senior figure told The Independent on Sunday that Mr Iksil's actions were "bloody annoying" and said that it was "probably quite likely" that the 2012 bonus pool would be halved.
He added: "It's a bit of a knock for Dimon. He's the guy who said that we can manage our own risk [without excessive regulation in the wake of the credit crunch], but clearly we can't manage our own risk. However, we had a good five or six years and to think we could keep going without a bump was probably naïve."
Mr Dimon has blamed the hit on "sloppiness and bad judgement" and has also admitted that more losses could follow. On Friday, the bank's shares fell 9.3 per cent, Fitch downgraded its credit rating by one notch, and regulators confirmed they were looking into the matter.
JP Morgan had grown to become the biggest US bank by assets last year, though nearly half its bankers are based in London. Mr Dimon was handsomely rewarded for the bank's record $19bn profit last year. He was given around $23m in pay, bonus and stock.
South Korea ferry passengers who were told to stay put 'got trapped' aboard sinking ship
Are beards attractive? Ryan Gosling says yes, but science says no. Take the A-list facial hair challenge and find out who's right
Andre Johnson: Wu-Tang Clan-discovered rapper severed his penis and jumped from LA building
Oscar Pistorius trial: Defence witness 'unqualified' to testify
Oscar Pistorius trial: Defence witness contradicts athlete's version in new blow for defence team
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
US Navy christens huge $3 billion destroyer ship USS Zumwalt that appears as a fishing boat on enemy radar
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
Nigel Farage fatigue? Half of voters ‘immune’ to Ukip’s appeal
Nigel Farage on Have I Got News For You: Ukip leader ridiculed over expenses and party 'fruitcakes'
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
- 1 Poveglia: 'World's most haunted island' up for sale...is anyone brave enough to buy it?
- 2 Babies cry at night to stop mothers procreating, scientists claim
- 3 24 people applied for the 'world's toughest job', here are their interviews
- 4 Andre Johnson: Wu-Tang Clan-discovered rapper severed his penis and jumped from LA building
- 5 Mrs Doubtfire 2: Robin Williams set to star in sequel to 1993 comedy
iJobs Money & Business
£150.00 per week: QA Apprenticeships: This company has been providing on site ...
£221.25 per week: QA Apprenticeships: This company is a well established Inter...
£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...
£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...