JPMorgan Posts Trading Loss on 10 Days as Derivative Bet Unwinds
JPMorgan Chase & Co. (JPM)’s traders lost money on 10 days during the third quarter, down from 28 in the prior three months when the largest U.S. bank struggled to unwind a wrong-way bet on credit derivatives.
Losses occurred on 39 days in the first nine months of this year, compared with 18 days during the same period of 2011, New York-based JPMorgan said today in a regulatory filing. Traders earned more than $200 million on seven days in the first nine months, including five in the third quarter, the bank said.
Chief Executive Officer Jamie Dimon, 56, ousted traders and managers and overhauled senior management amid more than $6.2 billion in losses at the chief investment office in London. The affair prompted the retirement of Chief Investment Officer Ina Drew, spurred lawsuits from shareholders and drew civil and criminal probes by at least three U.S. agencies.
Value-at-risk, or VaR, which measures the most the bank might lose on 95 percent of its trading days, increased to $162 million during the first nine months of this year from an average of $97 million in the same period last year.
The results aren’t directly comparable because the firm used a new formula in the third quarter as it tried to improve accuracy. Investigators focused attention on VaR because the model was altered in January before some of the errant trades were placed and may have obscured the mounting losses.
Goldman Sachs Group Inc., the New York-based investment bank that made 55 percent of its revenue this year from sales and trading, recorded losses from that business on two days in the third quarter, down from 21 days in the same period last year.
Morgan Stanley’s traders lost money on eight days during the third quarter, the New York-based company said in a Nov. 7 filing. Charlotte, North Carolina-based Bank of America Corp., the second-largest U.S. lender, said last week it had one day of trading losses, which were less than $1 million, and one day of revenue with more than $100 million.
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