Business, Economics and Jobs

Ina Drew, JPMorgan CIO, to retire over $2.3 billion trading losses


JPMorgan Chase & Co. chairman and CEO Jamie Dimon looks on while speaking at Simon Graduate School of Business at the University of Rochester's New York City Conference on May 3, 2012 in New York City. The bank's CIO Ina Drew retired on Monday in the wake of the $2.3 million dollar losses announced last week.


Mario Tama

Ina Drew, chief investment officer for JPMorgan Chase, announced her retirement on Monday, just days after news broke about the bank's $2.3 billion trading loss, the New York Times reported

Drew, who made about $14 million last year and is considered one of the most powerful women on Wall Street, will be replaced by 41-year-old Matt Zames, the head of global fixed income for the investment bank, Bloomberg Businessweek reported.

The entire London staff of JPMorgan's chief investment office may be fired over the dramatic losses, a person familiar with the situation told Bloomberg. Two of Drew’s lieutenants, Achilles Macris and Javier Martin-Artajo, are also expected to resign, according to the Times. 

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The Chief Investment Office, which Drew oversaw, made an intricate series of trades tied to the values of corporate bonds, which took a severe hit last month and posted huge losses in many of its derivatives positions, The Wall Street Journal reported. The losses could reach $4 billion, according to ABC News

“Ina Drew has been a great partner over her many years with our firm,” said JPMorgan’s CEO Jamie Dimon, according to the Times. “Despite our recent losses in the CIO, Ina’s vast contributions to our company should not be overshadowed by these events.”

Drew, who has been with JPMorgan for over 30 years, offered to resign several times after the magnitude of the losses came to light, Reuters reported, but her resignation was not accepted at first because of her strong reputation at the bank.

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JPMorgan is currently under review by the Securities and Exchange Commission, according to ABC News, and the bank announced Monday that a team of senior executives had been put together to investigate the recent losses.

The team will be led by Michael J. Cavanagh, head of JPMorgan's treasury and securities services group, according to the Times. 

“It’s important to remember that our company is very strong and well capitalized, with leading franchises across our businesses," Dimon said in his statement. "We maintain our fortress balance sheet and capital strength to withstand setbacks like this, and we will learn from our mistakes and remain diligently focused on our clients, who count on us every day.” 

“It’s good to see there’s accountability as well as responsibility here,” David Hendler, an analyst at CreditSights, told Bloomberg. “This person [Drew] was in charge of this strategy and it appears was not aware, or giving the right signals to top management, of the risks that were building.”

However, European regulators were highly critical of the bank's mishandling of their investments, Reuters reported. 

"The issue does not only underline the failure of good risk management ... but might also raise questions on external supervision," Michel Barnier, the European Union commissioner in charge of financial regulation, said in a statement, according to Reuters. "More internal and external controls and supervision are needed. Supervisors need to be more proactive on this front."

JPMorgan shares fell 2 percent to $36.19 at midday on Monday on the New York Stock Exchange, according to Reuters. The investment bank's stock has lost almost 12 percent (around $18.12 billion in total) of its value since the losses were announced.