JPMorgan And The London Whale Essay - 6439 Words

For the exclusive use of Y. Chen INS370 JPMorgan the London Whale Photo: ALAMY 03/2014-6003 This case was written by Andrew Chen, INSEAD MBA July 2013, under the supervision of Claudia Zeisberger, Affiliate Professor of Decision Sciences Entrepreneurship and Academic Director of the Global Private Equity Initiative (GPEI) at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Funding for this case study was provided by INSEAD’s Global Private Equity Initiative (GPEI). Additional material about INSEAD case studies (e.g., videos, spreadsheets, links) can be accessed at cases.insead.edu. Copyright  © 2014 INSEAD COPIES MAY†¦show more content†¦Instead, the senior most risk officer was Peter Weiland, who was chief market risk officer and officially reported to Barry Zubrow, the bank CRO, from 2007 to January 2012, though he reported to Drew on a de facto basis. Copyright  © 2014 INSEAD 1 03/2014-6003 This document is authorized for use only by Yen Ting Chen in FInancial Markets and Institutions taught by Nawal Ahmed Boston University from September 2014 to December 2014. For the exclusive use of Y. Chen In 2007, the CIO had begun constructing the synthetic credit portfolio as a hedge against the inherently long bias of the rest of the CIO portfolio. It was positioned to generate returns in an environment where credit spreads were widening. This proved to be prudent as spreads widened greatly in the financial crisis, and the SCP generated very strong returns. Exhibit 1 The Synthetic Credit Portfolio’s Historical Performance Source: 6/21/2012 presentation entitled, â€Å"CIO Compensation,† chart entitled, â€Å"Synthetic Credit Book Comparison: Revenue and SCB Trader Incentive (2008-2011),† JPM-CIO-PSI-H 0002746-2792, at 2749. After quite a strong 2009, SCP performance in 2010 was lacklustre, mostly as a result of a decision to sharply reduce portfolio exposure as market fears post-crisis began to subside. However, as fears over a European sovereign default began to take hold in 2011, the CIO team decided to increase their portfolio exposure to defend against another negative move inShow MoreRelatedJPMORGAN CHASE Essay2891 Words   |  12 PagesJPMorgan Chase is one of the oldest financial services company dating back over 200 years. It has $2 trillion in assets and operations in more than 60 countries. JPMC’s corporate strategy is it provides services and products in major capital markets. JPMorgan Chase, well known nationally and globally, is leading in investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management, and private equity. AccordingRead MoreThe Future of Banking: the Mobile Banking Revolution1403 Words   |  6 PagesChanges Kissel (2012) writes that since 2008, the world of financial services has been turned upside down. That is especially true of the banking industry, which has witnessed multiple bank failures and scandals such as the London Whale incident, in which a rogue trader for JPMorgan Chase cost the bank billions of dollars by making a risky bet on the credit market. In response, government authorities have passed new regulations intended to rein in these excesses. Portfolio Matrix Appendix B showsRead MoreRisk Management As A Crisis1778 Words   |  8 Pageset al provide a fascinating account of how JPMorgan Chase’s industry-leading risk management failed at the basic human level. After having prided itself on having the best risk management practices in the financial industry, and having survived the 2007-2009 financial crisis in better shape than many competitors, CEO Jamie Dimon often spoke of the bank’s ‘fortress balace sheet.’ However, the task force that investigated the $6 billion 2012 London Whale trading scandal concluded that despite the sophistication