Reuters: Private Equity: UPDATE 1-JPMorgan whittles down scandal-hit CIO unit -source

Reuters: Private Equity Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 1-JPMorgan whittles down scandal-hit CIO unit -source May 31st 2012, 11:59 Thu May 31, 2012 7:59am EDT By Douwe Miedema May 31 (Reuters) - JPMorgan will cut the private equity-like activities from its Chief Investment Office (CIO), the supposedly low-risk unit that caused more than $2 billion in trading losses, a source familiar with the matter said. Matt Zames, who is cleaning up the unit after its former head Ina Drew stepped down this month, is carving out the "special investments group" - which makes investments in other companies - from the scandal-hit CIO. The news was first reported by the Financial Times, which reported the unit had made investments in wireless internet provider LightSquared and, most recently, in ailing French technology company Technicolor. JPMorgan Chief Executive Jamie Dimon blamed a failed strategy for the losses in the CIO, whose task it was to put the bank's surplus money to work but which racked up huge losses in a series of disastrous derivatives trades. The special investment group will now be folded into JPMorgan's corporate centre, home to One Equity Partners, the bank's main private equity arm which manages $11 billion of investments for the bank, the source said. Norma Corio, a 30-year veteran of J.P. Morgan Chase, would continue to run the special investments group, the FT said. The wider CIO unit had become a huge money-spinner for JPMorgan, generating billions in revenue and running a risk book that was as big as its entire investment bank. Part of JPMorgan's problem was the sheer scale of excess deposits it had attracted after getting through the credit crisis relatively unscathed. Other safe-haven banks face a similar problem and some - such as HSBC - have also grouped together their liquidity and risk management in one unit. But JPMorgan was the more aggressive by far, allowing its credit desk in London - run by French trader Bruno Iksil, nicknamed the "London Whale" - to dominate markets whenever it took positions. In the future, the unit will continue to manage the risk on the bank's balance sheet, but without taking such excessive risks, the source said. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions