JPMorgan seeks to reduce clearing and settlement risks: WSJ

NEW YORK, Thu Aug 30, 2012 – JPMorgan Chase, a major player in providing clearing and settlement services to other financial firms, plans to reduce some services to clients and sever ties with others as it seeks to reduce risks involved in the business, the Wall Street Journal said.

JPMorgan is looking to assess the profits clients generate for the bank versus risks they pose after the collapse of broker-dealer MF Global Holdings Ltd. and the computer glitch at market maker Knight Capital Group Inc. highlighted dangers, the paper said, citing people familiar with the bank.

The bank already has stopped serving some clients, but the newspaper said their names could not be obtained.

Previously undisclosed details of the aftermath of Knight’s mishap, including JPMorgan’s refusal to accept thousands of Knight-owned securities as the brokerage firm scrambled to put new financing in place, underline the bank’s risk-averse stance, the paper said.

However, Knight Capital is not on the list of clients JPMorgan is contemplating dumping, people familiar with the bank told the WSJ.

JPMorgan could not immediately be reached for comment by Reuters outside of regular U.S. business hours.

Goldman Sachs adds JPMorgan Chase & Co. to conviction buy list

NEW YORK, Tue Jun 26, 2012 – Goldman Sachs added JPMorgan Chase & Co. to its America’s conviction buy list, saying the U.S. bank’s capital position and earnings power can offset its recent hedging loss of at least $2 billion.

Goldman downgraded Morgan Stanley to “neutral” from “buy,” and removed the stock from its conviction buy list, saying earnings could be hurt by muted capital markets activity.

While Goldman sees value in Morgan Stanley’s shares at current depressed levels, it expects better returns at JPMorgan.

The 15 percent decline in JPMorgan share price since the largest U.S. lender by assets announced trading losses at its chief investment office has been “drastic,” given the unit’s 5 percent average earnings per share contribution, Goldman said.

JPMorgan, which has temporarily halted its $15 billion share repurchase program, may also resume buybacks this year, lending further support to the stock, Goldman analysts said.

Goldman, however, cut its second-quarter earnings estimates for JPMorgan to 60 cents from 75 cents to reflect a quicker recognition of its trading losses.

The brokerage cut its price target on Morgan Stanley to $16 from $20.

In the long-term, Goldman said JP Morgan and Morgan Stanley offer meaningful return on equity.

Shares of JPMorgan closed at $35.32, while Morgan Stanley closed at $13.48 Monday on the New York Stock Exchange.

Schapiro: SEC probes JPMorgan risk model disclosure

WASHINGTON, Tue Jun 19, 2012 – Securities regulators are investigating whether JPMorgan Chase & Co. misled investors in its April earnings statement by failing to disclose a change in how it measured risk, Securities and Exchange Commission Chairman Mary Schapiro said on Tuesday.

“Part of what we are investigating is the extent of that disclosure and whether it was adequate, among other things,” Schapiro told lawmakers during a House Financial Services hearing.

Schapiro’s comments were the first time she said explicitly that the SEC is focusing on what the bank disclosed and what Chief Executive Jamie Dimon said on April 13 after news reports about rising risk at the bank’s Chief Investment Office, which turned out to have lost at least $2 billion trading credit derivatives.

By omitting any mention of model change from its earnings release in April, the bank disguised a spike in the riskiness of a particular trading portfolio by cutting in half its value-at-risk number.

Tuesday was the second time that U.S. financial regulators, as well as Dimon, have appeared before lawmakers to answer questions about the failed hedging strategy.

Schapiro said on Tuesday that although companies are not required to disclose such a model changes in their earnings releases, other SEC rules still require such statements to be truthful and complete.

The agency is looking at the disclosure in light of the fact that it came at the same time that Dimon called reports about heightened risk at the CIO office a “tempest in a teapot,” Schapiro said.

JPMorgan weighs on futures as banks drop after $2 billion blunder

NEW YORK, Fri May 11, 2012 – Stock index futures fell on Friday and were on track to extend the week’s losses after JPMorgan Chase & Co. revealed a trading loss of at least $2 billion from a failed hedging strategy that weighed on bank shares.

The news sent shares of the Dow component down 8.1 percent to $37.42 in premarket trading, and is the latest hurdle for a sector already besieged by the sovereign debt crisis in Europe and fears of slowing growth globally.

While other gains partially offset the trading loss, JPMorgan Chase estimates the business unit with the portfolio will lose $800 million in the current quarter, excluding private equity results and litigation expenses. The bank had previously expected the unit to earn a profit of about $200 million.

Jamie Dimon, the chief executive of the biggest U.S. bank by assets, cautioned that losses could grow by another $1 billion.

“While this is an isolated incident that has nothing to do with how the economy will recover, it is very painful to hear,” said Tim Speiss, head of personal wealth advisors at EisnerAmper in New York. “Investors need to look at what this might do to JPMorgan’s equity value, and whether it is something that could trouble the whole sector.”

Bank of America Corp. fell 3 percent to $7.47 before the bell while Citigroup Inc. lost 3.8 percent to $29.50 and the Financial Select Sector SPDR was off 1.9 percent to $14.70.

JPMorgan Chase profit falls, but sees hope in economy

NEW YORK ― JPMorgan Chase & Co’s. fourth-quarter earnings fell 23 percent, in line with Wall Street expectations, as the European debt crisis depressed trading and corporate deal-making.

But Chief Executive Jamie Dimon said the largest U.S. bank by assets was seeing signs of improvement in loan demand and credit quality as the economy recovers.

The bank’s shares fell 2.9 percent in premarket trading. Through Thursday, the shares had climbed 11 percent this year.

JPMorgan is the first major U.S. bank to announce results for the period. Its figures show Wall Street firms such as Goldman Sachs Group Inc. and Morgan Stanley are in for a tough quarter as investment banking results suffer.

Others such as Bank of America Corp and Citigroup Inc, which also report results in the coming days, could benefit from the stronger business loan demand that JPMorgan experienced, but they continue to face problems in investment banking and housing loans.

JPMorgan’s results “show that there are major headwinds against the banking industry and it requires a strong management team to battle the headwinds,” said Rick Meckler, president of investment firm Libertyview Capital Management in New York.

JPMorgan Chase, two others lead in cleaning up checking account fee list

NEW YORK ― JPMorgan Chase & Co., the biggest U.S. bank, and two large credit unions have taken the lead in cleaning up the banking industry’s fee-laden fine print for checking accounts, an advocacy group said on Thursday.

JPMorgan Chase, the Pentagon Federal Credit Union and the North Carolina State Employees’ Credit Union have started presenting account fee schedules in simple, boxed tables of three pages or less, according to the Pew Health Group, the health and consumer-product safety arm of the Pew Charitable Trusts.

Fee disclosure documents for large banks typically run 111 pages and hide important fees from customers in technical fine print, according to an April report by Pew’s Safe Checking in the Electronic Age Project. Bank fees became a focus of federal lawmakers in the aftermath of the credit crisis.

Many people have been surprised by fees they were charged, Pew researchers found in interviews with consumers. Fee disclosures are too dense for consumers to know better, said Susan Weinstock, director of the Pew project.

“It is basically impossible to comparison shop for a checking account,” Weinstock said in an interview. She hopes the new tables will change that.

JPMorgan Chase is posting its first table online on Thursday for its most-used “Total Checking” account. The bank plans to roll out similar presentations for other types of accounts in the new year, Ryan McInerney, CEO of the company’s consumer bank, told Reuters.

Another large bank and some regional banks and other credit unions are working to bring out simplified tables of their own soon, Weinstock said . She is calling on the government’s new Consumer Financial Protection Bureau to require all banks to do the same.

Banks’ fee revenue could come under pressure if it is easier for consumers to compare charges.

As JPMorgan Chase began to boil down the fees into a table, executives decided some were bad for business and had to go. For example, the bank dropped charges of $25 for closing an account within 90 days of opening it and $15 to receive a rush copy of an item.

Banks cutting principal on some mortgages, according to report

NEW YORK ― Bank of America Corp. and JPMorgan Chase & Co. have started modifying tens of thousands of mortgages where the banks deem the loans especially risky, even if the borrowers have not asked, The New York Times reports.

In some cases, the paper said, the banks are slashing the amount borrowers owe, citing one case in Florida where a woman’s principal balance was cut in half.

The paper said the banks are targeting holders of pay option adjustable-rate mortgages, a type of loan where borrowers have the option of skipping some principal and interest payments and having the amount added back onto the loan.

Such “option ARM” loans were seen as especially high risk in the wake of the financial crisis; the two banks collectively still have tens of billions of dollars of such loans in their portfolios.

One law professor quoted by the Times said the banks were behaving in contradictory ways, modifying some loans that should not be and not modifying some loans that should be.

Spokespeople for the two banks were not immediately available to comment.

Madoff trustee readies amended JPMorgan $6.4 billion suit

NEW YORK ― The trustee seeking money for Bernard Madoff’s victims plans to amend by June 24 his $6.4 billion suit against JPMorgan Chase & Co., once the imprisoned Ponzi schemer’s main bank.

In a June 14 letter to U.S. District Judge Colleen McMahon in Manhattan, the trustee Irving Picard did not identify the planned changes, but said they will make the current complaint “a nullity.”

JPMorgan asked on June 3 to dismiss that complaint.

Picard also asked for an extended timetable to pursue his case, prompting a sharp response from the judge.

“Why must I wait until June 24 for a new complaint?” McMahon handwrote on the letter on Thursday. “I set an expedited schedule for a reason. I will OK this schedule, but will not add ONE day to it in the future.”

JPMorgan spokeswoman Jennifer Zuccarelli declined to comment. A spokeswoman for Picard was not immediately available for comment.

In a complaint made public in February, Picard accused the second-largest U.S. bank of being “thoroughly complicit” in Madoff’s fraud and ignoring red flags.JPMorgan countered that Picard never alleged facts to show the bank knew a Ponzi scheme was taking place.

Madoff was arrested on Dec. 11, 2008, and after pleading guilty is serving a 150-year prison sentence.

McMahon had scheduled a July 28 hearing to consider JPMorgan’s motion to dismiss the case. The new schedule suggests the hearing will be delayed at least into September.

The case is one of at least three that has been moved to federal district court, where juries can hear cases, from bankruptcy court, where Picard had originally sued.

U.S. District Judge Jed Rakoff is reviewing some issues in Picard’s $9 billion case against HSBC Holdings Plc.

He is also considering whether the trustee can invoke racketeering law in a $58.8 billion lawsuit against Italy’s UniCredit SpA, Austria’s Bank Medici AG and its founder Sonja Kohn, and other defendants.

Departure prompts leadership changes at JPMorgan Chase

NEW YORK — JPMorgan Chase & Co. on Tuesday said the head of its international business will retire from the bank early next year in a realignment that will expand responsibilities for other executives.

JPMorgan Chase announced the departure of Heidi Miller a year after she was named president of international operations. The 58-year-old previously served as head of treasury and securities services. The international post was a new one for the New York-based bank, which has been looking to expand overseas.

The duties of three other executives also will shift under the changes announced Tuesday:

Charlie Scharf, CEO of retail financial services, will become a partner in One Equity Partners, the private equity arm of JPMorgan Chase.

Todd Maclin, head of the commercial bank, will succeed Scharf as head of the company’s retail business, including the branch network, consumer franchise, small business banking and the Chase private client business. He will continue as CEO of the commercial bank.

Gordon Smith, CEO of card services, will take on responsibility for JPMorgan Chase’s auto finance and student lending businesses, in addition to his current role.

It is the second year in a row that the company has shuffled executive positions, part of a program JPMorgan Chase set up to have executives work across multiple divisions to broaden their experience.

Last June, in addition to making Miller the head of international operations, Doug Braunstein was named chief financial officer. He succeeded Michael Cavanagh, who took Miller’s position at the time as head of treasury and securities services.

Miller “worked closely with our key business leaders to help develop a comprehensive and coordinated international business strategy, growth plan and governance structure,” CEO Jamie Dimon said.

Miller’s career in banking and finance spans more than 30 years, including serving as chief financial officer of Citigroup and Bank One.

Jes Staley, CEO of the JPMorgan Chase’s investment bank, will also oversee the company’s international franchise across all its businesses.

That move “is consistent with Heidi Miller’s recommendation that responsibilities for international activities be embedded back into the businesses,” a statement from the bank said.

JPMorgan Chase announced the moves after its shares fell 6 cents to close at $41.61. In aftermarket trading, the stock gained 5 cents.