Lloyds Banking Group Plc (LLOY) Chairman Win Bischoff said the $2 billion trading loss suffered by JPMorgan Chase & Co. (JPM:US) could happen to any bank.
“If it can happen to JPMorgan, which has such a good risk culture, then it could happen anywhere,” Bischoff said today on the sidelines of the bank’s annual general meeting in Edinburgh.
JPMorgan reported the loss related to derivatives trading last week after an “egregious” failure in a unit managing risks. Bischoff said Lloyds had investigated its own operations and was satisfied with the safeguards at the lender.
“We have looked at all the things we are doing that might have linkages to some of those financing structures,” Bischoff said. “We simply haven’t found anything.”
Chief Executive Officer Antonio Horta-Osorio, 48, is seeking to strengthen London-based Lloyds’s balance sheet by selling assets, cutting costs and bolstering its capital strength. Lloyds, which cut more than 30,000 jobs since its 20 billion-pound ($31.7 billion) taxpayer rescue in 2008, said this month it will shrink assets further and faster than forecast as Britain’s biggest mortgage lender reduces its reliance on short- term funding.
“We are mostly a retail and commercial bank and therefore the value that we have at risk and our limits are completely different from investment banking operations” such as JPMorgan, Horta-Osorio told journalists today.
Lloyds cut its reliance on wholesale funding by 24 percent to 231.3 billion pounds in the first quarter. Funding with a maturity of less than one year fell by 41 percent to 91.4 billion pounds. The bank boosted its core Tier 1 ratio, a measure of financial strength, to 11 percent in the quarter, from 10 percent a year earlier. That exceeds the 9.5 percent target required by the Basel Committee on Banking Supervision for lenders such as Lloyds, which are deemed too big to fail.
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