JPMorgan Chase doubles its trading loss to $4.4 billion
JPMorgan Chase has raised its estimate of the value of its recent losses from trading in complex financial derivatives to $4.4 billion.
The US bank said the executives responsible had been dismissed without severance pay and the bank would be clawing back two years of their pay.
When it first announced the loss in May, it said it had lost at least $2 billion.
The bank also said it had found evidence that some traders may have been trying to hide their losses.
The bank said it would restate its results from the previous three months because it had made $459 million less than it thought.
It blamed the restatement on the fact that “certain individuals may have been seeking to avoid showing the full amount of the losses in the portfolio during the first quarter”.
JPMorgan Chase has raised its estimate of the value of its recent losses from trading in complex financial derivatives to $4.4 billion
Despite those losses from its chief investment office, the bank reported three-month net profit of $4.96 billion, down 8.7% from the same period last year. JPMorgan’s shares opened up 3% in New York.
Chief executive Jamie Dimon said he had closed the division of the bank responsible for the losses and moved the remainder of the trading position to its investment banking division.
The executive in charge of the closed division, Ina Drew, left the bank in May, days after the losses were announced.
Before Friday’s gains, JPMorgan had lost about 15% of its market value since the losses were first announced.
It also said that it expected another $700 million to $1.7 billion of losses from the derivatives trading.
Responding to questions from analysts following the release of results, Jamie Dimon said: “I think it’s silly for anyone in the business world to think you’re not going to make mistakes.”
“It is not possible in the real world. I just think the mistakes should be smaller, fewer and far between, this being an exception.”
Another bank with rising shares on Friday was Wells Fargo, which was also reporting results.
It posted second-quarter net profits of $4.6 billion, up 17% from the same period last year.
Its profits from mortgages were up to $2.9 billion from $1.6 billion last year.
Wells Fargo is the fourth-biggest US bank and the biggest mortgage lender.
The results came the day after it paid $175 million to settle allegations from the Justice Department that during the housing boom, it had charged higher rates and fees to African-American and Hispanic customers.
Wells Fargo said it had settled to avoid a long legal battle.