JPMorgan CDS Loss Could Hit $9 Billion

Jun 29 2012 | 11:45am ET

Bruno Iksil may have—with an unwanted assist from hedge funds—cost his employers almost five times as much as originally thought.

Iksil, the JPMorgan Chase trader behind the credit default swap index trade that is costing the bank a fortune, may be responsible for a loss of $9 billion. JPMorgan CEO Jamie Dimon said last month that the loss was only $2 billion, although Dimon acknowledged that it could grow—to $4 billion.

According to The New York Times, JPMorgan's losses have been mounting in recent weeks, despite the bank's use of BlueMountain Capital Management to help it unwind the trade, and the exit of several hedge funds who profited at the bank's expense from their end of the trade.

JPMorgan has already cleared more than half of Iksil's position—it originally said it planned to exit the trade completely by early next year, but now may clear it by the end of this one. With the position closing so quickly, an internal report shows a worst-case scenario of an $8 billion to $9 billion loss.

JPMorgan said it will disclose more information about the loss on July 13.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Future of Private Equity: New Opportunities, New Challenges

Feb 3 2017 | 6:41pm ET

The private equity industry’s astonishing rebound since the financial crisis has...

 

From the current issue of