JPMorgan Halts Buybacks in Wake of Trading Loss
JPMorgan Chase is suspending its share buybacks but maintaining its dividend as it licks its wounds from the aftermath of its $2 billion hedging loss, CEO Jamie Dimon said Monday.
Speaking to investors at the at the Deutsche Bank Securities Global Financial Services Investor Conference in New York worried over the so-called "London whale" trading debacle, Dimon said the JPMorgan Chief Investment Office has an unrealized $8 billion profit this year. (See correction below.)
But it must suspend its buybacks as it fights to reach capital requirements under the Basel III accord, Dimon said.
JPMorgan has come under fire for the trading loss, announced on May 10, which could escalate as the accounting unwinds.
The company's stock has fallen more than 21 percent over the past month and lost nearly $30 billion of market value since the announcement.
The company received permission to buy back $12 billion in stock this year and another $3 billion in 2013 after the Federal Reserve tested the financial strength of major banks to withstand severe economic stress.
Dimon said at the time that the bank would be in best position to buy back stock as long as the price stayed below $45.
"We are trying to do everything by the book," Dimon said Monday.
The bank chief has been an outspoken critic of bank regulation, particularly some provisions of the Dodd-Frank reform bill that seeks to limit risk-taking and protect against the too-big-to-fail institutions at the center of the 2008 financial crisis.
Dimon maintained that the bank maintains a "fortress balance sheet" that will allow it to weather storms like the London-based Chief Investment Office trading loss. He added that the company is making progress on risk reduction and has the right team in place to do so.
(Correction: JPMorgan's CIO has an unrealized profit of $8 billion this year. An earlier version contained a misstatement.)