JPMorgan Chase & Co. (JPM:US), whose losses from credit swaps will top $2 billion, amassed a trading position in the contracts last quarter at least four times as large as that of its closest U.S. competitor, a government report showed.
The New York-based bank suffered the losses after Bruno Iksil, a trader in the chief investment office’s U.K. group known as the London Whale, built a portfolio of credit derivatives so large it distorted price relationships in the market. Comparing purchases and sales of credit swaps in the first quarter and the fourth quarter last year, JPMorgan bought $148 billion more in notional value of the swaps and sold $232 billion more of the contracts, the Office of the Comptroller of the Currency said today.
That compared with Citigroup Inc. (C:US) buying $36 billion more in credit swaps quarter-on-quarter and selling $46 billion more, while Goldman Sachs Group Inc. (GS:US) purchased $15 billion more and sold $16 billion more from one quarter to the next, the OCC data show. Bank of America Corp. (BAC:US) reduced the amounts of credit- default swaps it bought by $589 billion and sold by $587 billion quarter-on-quarter, OCC said.
JPMorgan lost $761 million in revenue from trading credit derivatives and securities in the three months ended in March, the OCC said. It earned $2.5 billion in interest-rate derivatives and securities and $545 million in foreign exchange positions, OCC said.
All U.S. commercial banks earned $7 billion in revenue by trading over-the-counter derivatives and securities in the first quarter, down 5 percent from the year-earlier period as credit trading slowed, the OCC said in the report. The U.S. agency said its main measure of credit risk in derivatives markets, the so- called net current credit exposure, fell 12 percent, or $53 billion, to $377 billion.
The OCC data only captures U.S.-based commercial banks, so dealers such as Deutsche Bank AG aren’t accounted for. The revenues combine private OTC derivatives and cash securities trading, which OCC doesn’t break out by asset type.
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