$2bn hedging loss leaves JPMorgan with ‘egg on our face’

JPMorgan Chase & Co, the biggest US bank by assets, says it has suffered a trading loss of at least $2bn (€1.53bn) from a failed hedging strategy, a shock disclosure that hit financial stocks and the reputation of the bank and its chief executive Jamie Dimon.

For a bank viewed as a strong risk manager that went through the financial crisis without reporting a loss, the errors are embarrassing, especially given Dimon’s public criticism of the so-called Volcker rule to ban proprietary trading by big banks.

“This puts egg on our face,” Dimon said, apologising on a hastily called conference call with stock analysts. He conceded the losses were linked to a Wall Street Journal report last month about a trader, nicknamed the London Whale, who, the report said, amassed an outsized position which hedge funds bet against.