Financial News

  • 24 January 2013, 7:26

JP Morgan Boss Says Sorry For 'London Whale'

The boss of JP Morgan has apologised for the $6bn (3.8bn) loss caused to the investment bank by the so-called London Whale trades.

JPMorgan Chase & Co chief executive Jamie Dimon said sorry to shareholders, calling it a "terrible mistake," but said the bank has moved on and is still highly profitable.

"If you're a shareholder of mine, I apologise deeply," Mr Dimon said at a presentation at the World Economic Forum in Davos, Switzerland.

"But we had record results and life goes on."

Despite the losses totalling $6.2bn from the bad trades last year, the bank still managed to earn a record $21.3bn (13.4bn) in 2012.

The complex but legitimate derivatives trades were incurred by its chief investment office in London, overseen from a New York executive.

JP Morgan said its 2012 writedown was mostly felt in the first half, although there was a continuing "modest loss" from the trades in its third quarter.

While revenue from its fixed income trading revenue rose, helped by the Federal Reserve programme to buy mortgage debt, revenue from mortgage lending rose 36% as the US housing market continued its recovery.

The bank's trading hit came as the London team took bets that were designed to protect it by hedging against its other investments, but the strategy dramatically backfired.

The revelation hit banking shares across the world in May and heightened calls for more regulation in the UK.

JPMorgan Chase still remains the largest US bank, with $2.36trn (1.5trn) in assets as the end of last year.

Its chief investment office has since been restructured and traders and executives involved with the bad trade - referred to as the "whale" trade after the nickname of a London-based trader involved - were dismissed.

After an internal review, Mr Dimon's bonus for 2012 was cut in half from $22m (14m) to $11m.

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