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JP Morgan loss - Heads roll

By rotide
Created 14/05/2012 - 07:22

Unusually when a massive bank trading loss is announced, there is a single trader that eventually carries the can but the recently announced JP Morgan US$ 2 billion loss, seems a little different.

Not that the end result will differ much, as the share price is hit bigtime on concerns that their risk management system clearly isn't up to the job and though we are used to the word "billion" being bandied about these days, it is still a lot of money.

This time the loss seemed to result out of hedging of the banks funds, though the word "hedging" seems to cover a multitude of sins and I have often wondered how much Hedge Funds actually hedge but I digress. 

Heads are beginning to role now as investigations take place to find out what happened, which places the blame somewhere in one of the London trading teams.

While this is a huge amount of money, this is not a life threatening situation as far as this major international bank is concerned, who will still make money in the current quarter but the blow to the banks' credibility will take some time to shake off.

It will however create more regulation in the banking world, which may not be such a bad thing but no past regulation has stopped these periodical occurrences and probably never will until robot trading takes over completely.

 


Source URL:
https://www.newbusiness.co.uk/news/jp-morgan-loss-heads-roll