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JPMorgan CEO Should Affirm If Dividend Is Safe, Citigroup Says

JPMorgan Chase & Co. CEO Jamie Dimon is under pressure from investors and regulators to explain how the bank’s chief investment office, which is assigned to manage excess cash while minimizing risk, wound up with a $2 billion loss from trades in illiquid credit derivatives. Photographer: Peter Foley/Bloomberg
JPMorgan Chase & Co. CEO Jamie Dimon is under pressure from investors and regulators to explain how the bank’s chief investment office, which is assigned to manage excess cash while minimizing risk, wound up with a $2 billion loss from trades in illiquid credit derivatives. Photographer: Peter Foley/Bloomberg

May 21 (Bloomberg) -- JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon may give investors “a better explanation” of how the bank lost $2 billion on trading and whether the dividend is safe when he appears at an investor conference later today, according to Citigroup Inc. analysts.

“A lot of investors’ concerns have gotten to extreme levels,” wrote Citigroup’s Keith Horowitz in a note to clients. Dimon’s presentation may include “we would hope a very clear statement that dividend is not at risk and that buybacks are still expected in 2012.”

Citigroup called New York-based JPMorgan, the biggest U.S. bank by assets, an “absolute buy,” saying that estimates on the ultimate size of the trading loss “are getting a bit carried away.” A dividend cut is very unlikely, Horowitz wrote.

Dimon is scheduled to speak at 9:30 a.m. New York time at a conference sponsored by Deutsche Bank AG in lower Manhattan. He’s under pressure from investors and regulators to explain how the bank’s chief investment office, which is assigned to manage excess cash while minimizing risk, wound up with a $2 billion loss from trades in illiquid credit derivatives.

Dimon announced the loss May 10 and said it could expand in coming weeks. He assailed the bank’s handling of trading in credit derivatives as “flawed, complex, poorly reviewed, poorly executed and poorly monitored.”

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To contact the reporter on this story: Rick Green in New York at rgreen18@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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