GO
Loading...

Beware 'Knee-Jerk' Reaction After JPMorgan Loss: Banker

Monday, 14 May 2012 | 8:44 AM ET

JPMorgan’s $2 billion trading loss could lead to “knee-jerk” reactions by regulators, risking regime arbitrage between countries, Barclays co-CEO of investment banking Rich Ricci told CNBC.

Chief Investment Officer Ina Drew, who headed the trading unit, has already resigned since the bank’s massive loss from a failed hedging strategy was made public last Thursday, and two further resignations by senior executives are expected this week.

Barclays' Ricci said an overly rapid response by bank regulators could result in differing regulatory systems around the world, meaning banks might simply head elsewhere to perform certain trades.

“We have got to have unified regulation around the world to make sure it is a level playing field, so we don’t have this regulatory arbitrage around trades that are uneconomic from a UK bank’s perspective being executed by banks in other parts of the world. I think that’s a danger to the system,” Ricci told CNBC’s "Worldwide Exchange" on Monday.

Barclay's Ricci: We Need Unified Regulation Around the World
Rich Ricci, Co-CEO of Corporate and Investment banking at Barclays, told CNBC, "That type of trade (JPM) couldn't exist in a UK bank under the Basel III rules, what we have here is different regulatory regimes being implemented at different speeds. We have got to have unified regulation around the world to make it a level playing field."

“What I’d hate to see is just a knee-jerk reaction around the Dodd-Frank Act , around the specifics of the Volcker Rule,” he added.

Speaking earlier on NBC’s "Meet the Press," JPMorgan CEO Jamie Dimon said: “In hindsight we took far too much risk. The strategy we took was barely vetted, barely monitored. It should never have happened.”

By CNBC.com’s Katy Barnato

  Price   Change %Change
BANKS
---
JPM MLP ETN
---

Featured

Contact Europe News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Europe Video

  • Jan Dunning, CEO of St Petersburg-headquartered hypermarket chain Lenta, says the situation in Ukraine has had no impact on the group, as consumer confidence remains unaffected in Russia.

  • Vincent Deluard, European strategist at Ned Davis Research Group, says the strong euro is a problem for the region's companies, especially for the large exporters.

  • European shares closed higher on Thursday as investors brushed aside concerns regarding Ukraine and focused instead on Wall Street earnings and the latest U.S. jobs data.