JP Morgan restructuring division caused $2 billion loss: Report
London: Financial services firm JP Morgan is spinning out the special investment group from its troubled Chief Investment Office (CIO) in a move to restructure the division that caused USD 2 billion trading losses this month, a report said.
"JP Morgan Chase is spinning out the 'special investments group' from its troubled chief investment office as executives clean up the division that caused USD 2 billion trading losses," the Financial Times reported citing a source.
The overhaul is part of a broader audit of risk-taking and risk controls at the bank, the report noted.
Special investment group, which was not implicated in the CIO's trading losses, would be moved to the US bank's corporate division and prevented from seeking fresh investment opportunities, the report said.
Special investment group's unit include wireless internet provider, LightSquared, which has filed for bankruptcy protection, it added.
Matt Zames, who replaced Ina Drew as head of the CIO, has decided his division should be refocused on basic asset-liability management. Besides, Norma Corio, a 30-year veteran of the bank, would continue to run the group.
"Exotic activity including the private equity investments and the sorts of risky credit derivatives positions that caused the USD 2 billion losses, have been banned," the daily said.
Earlier this month, JP Morgan acknowledged that it had lost USD 2 billion on derivative trades.