Tuesday, May 22, 2012

"JPMorgan Counterparty Platt Says Bank’s Loss May Widen" ($7 Billion?) JPM

 In early pre-market trade the stock is up 31 cents at $32.82 last.
First up, Bloomberg:
JPMorgan Chase & Co. (JPM) may face even bigger losses on faulty bets in credit markets if Europe’s debt crisis worsens, according to one of the hedge funds that took the other side of the trades.

“They’re not out of those positions,” Michael Platt, co- founder and chief executive officer of BlueCrest Capital Management LLP, said today in an interview on Bloomberg Television’s “Inside Track.” “If we end up with a catastrophe in Europe in the short run, they’re probably not positions that anyone would want to have.”

BlueCrest, based in Geneva, manages $32 billion. Platt said a credit fund run by his firm took a “small” position against JPMorgan after finding “anomalies” in the pricing of certain credit derivatives. BlueCrest would make money as the prices corrected, he said.

JPMorgan, the biggest U.S. bank by assets, is seeking to stanch losses in its chief investment office as other hedge funds exploit its money-losing positions by trading in indexes tied to credit-default swaps. New York-based JPMorgan revealed a $2 billion loss on May 10, and CEO Jamie Dimon said it could increase by as much as $1 billion this quarter....MORE
And from the Guardian:

Double trouble at JP Morgan: trader's losses could exceed $7bn 

The crisis at JP Morgan escalated yesterday as it emerged its trading losses in London could rise to as much as $7bn (£4.5bn) and the US bank cancelled a share buyback. Fears were growing that the losses could spiral from an initial $2bn, which was declared on 10 May, as JP Morgan struggles to unwind the massive bets made by the so-called "London Whale" trader Bruno Iksil.

In a further blow, chairman and chief executive Jamie Dimon has suspended plans to use the US bank's own funds to buy back $15bn worth of shares. Buybacks are a popular way for firms to use up cash sitting on the balance sheet and prop up the share price.

JP Morgan shares tumbled 82 cents or 2.45 per cent to a new six month-low of $32.67. The bank's value has fallen by a quarter in a year. Mr Dimon insisted that the decision to cancel the buyback was not linked to fears about a possible increase in losses. "You should not interpret this as anything about the size of the loss," he said....MORE
HT on both stories: naked capitalism