JPMorgan’s “whale” is on its way to becoming a sardine

October 12, 2012
October 12, 2012

JPMorgan Chase CEO Jamie Dimon told investors in a conference call today that the bank had downgraded its estimate of how much money it could lose on the portfolio created by the so-called “London Whale”—a bad bet that flouted the bank’s risk-management policies and cost it billions.

Bruno Iksil, a powerful trader in the firm’s London offices, drew headlines earlier this year after amassing an enormous losing position on European corporate credit-default swaps. In July, the bank said those positions had already cost it $5.8 billion. The bank has been attempting to draw down those positions since May, when the extent of the losses were realized.

Dimon said that Iksil’s remaining trades “had a modest loss this quarter,” but said that its projection of the future losses, like its overall assessment of the market risk, had fallen by 20% since its second quarter earnings call in July. At that time, the bank thought it could lose an additional $800 million to $1.6 billion from the bad portfolio. The new estimate is therefore in the range of $640 million-$1.3 billion.

“We hope by the end of the year it’s a non-issue,” Dimon told investors.

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