Fitch downgrades JPMorgan Chase after huge loss
New York: Fitch Ratings downgraded JPMorgan Chase's long term debt rating to A+ from AA- after the bank revealed a stunning trading loss.
The rating firm also placed the bank's all parent and subsidiary long-term ratings on negative watch.
The rating actions came Friday after JPMorgan Chase's disclosure of a USD 2 billion trading loss on its synthetic credit positions in its Chief Investment Office.
Fitch viewed the size of loss as manageable but believed the potential reputational risk and risk governance issues raised at JPMorgan Chase are no longer consistent with an AA- rating.
Despite the downgrade, the rating firm said that JPMorgan Chase is still a dominant player in the US market and keeps growing in global financial market as its capital remains sound and compares well with global peers.
Fitch also said that its future moves on the bank's rating will base on how JPMorgan Chase has addressed what Fitch views to be risk management and oversight deficiencies that allowed such a loss to occur.
Fitch will also review the potential implications for market confidence in the bank and reputational damage as a result of this loss on both its liquidity profile and counterparty and dealings, according to its statement.