JPMorgan trading losses $4.4 billion, more than twice initial estimate
JPMorgan Chase & Co. chairman and CEO Jamie Dimon looks on while speaking at Simon Graduate School of Business at the University of Rochester’s New York City Conference on May 3, 2012 in New York City. The bank’s CIO Ina Drew retired on Monday in the wake of the $2.3 million dollar losses announced last week.
JPMorgan, the largest bank in the US, reported a much larger than estimated $4.4 billion trading loss in its chief investment office on Friday, according to Bloomberg.
The bank lost $4.4 billion because of the trade from April to June, but it lost an additional $1.4 billion in the first three months of the year, according to the Associated Press, bringing the total losses to $5.8 billion. The original estimate given by CEO Jamie Dimon in May was $2 billion.
Dimon said, "This has shaken our company to the core," according to the AP.
Bloomberg said the losses helped drive down second-quarter profits by 9 percent. The announcement will likely complicate Dimon's efforts to restore investor confidence and the firm is also being investigated over the possible gaming of US energy markets and under subpoena in global investigations of interest rate fixing in London.
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JPMorgan said traders may have tried to conceal the extent of their losses earlier in the year, according to Reuters. The bank said it had cleaned up its chief investment office, which was responsible for the bad trades.
One of the traders, Bruno Iksil, earned the nickname "The London Whale" for his big positions in the credits derivaties markets. A source told Reuters on Friday that Iksil left the bank.
More on GlobalPost: "London Whale," Bruno Iksil, leaves JP Morgan
Mike Cavanagh, who led the investigation into the trading losses, said that the "trades grew in complexity and outpaced the skills and ability of the managers within the unit," according to The New York Times.
According to Reuters, JPMorgan was one of the key inventors of credit derivatives. The bank said the chief investment office would now focus on conservative investments.
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