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JPMorgan Chase raises its recent trading loss to $4.4bn | JPMorgan Chase raises its recent trading loss to $4.4bn |
(40 minutes later) | |
JPMorgan Chase has raised its estimate of the value of its recent losses from trading in complex financial derivatives to $4.4bn (£2.8bn). | JPMorgan Chase has raised its estimate of the value of its recent losses from trading in complex financial derivatives to $4.4bn (£2.8bn). |
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. | 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 $2bn. | When it first announced the loss in May, it said it had lost at least $2bn. |
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 $459m less than it thought. | The bank said it would restate its results from the previous three months because it had made $459m 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". | 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". |
Despite those losses from its chief investment office, the bank reported three-month net profit of $4.96bn, down 8.7% from the same period last year. JPMorgan's shares opened up 3% in New York. | Despite those losses from its chief investment office, the bank reported three-month net profit of $4.96bn, 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. | 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. | 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 $700m to $1.7bn of losses from the derivatives trading. | It also said that it expected another $700m to $1.7bn of losses from the derivatives trading. |
Responding to questions from analysts following the release of results, Mr Dimon said: "I think it's silly for anyone in the business world to think you're not going to make mistakes." | Responding to questions from analysts following the release of results, Mr 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." | "It is not possible in the real world. I just think the mistakes should be smaller, fewer and far between, this being an exception." |
Wells Fargo | |
Another bank with rising shares on Friday was Wells Fargo, which was also reporting results. | |
It posted second-quarter net profits of $4.6bn, up 17% from the same period last year. | |
Its profits from mortgages were up to $2.9bn from $1.6bn last year. | |
Wells Fargo is the fourth-biggest US bank and the biggest mortgage lender. | |
The results came the day after it paid $175m 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. |