INDIA BUSINESS WORLD - August 1st - August 31st - 2008
JPMORGAN SUFFERS LOSSES OF $1.5 BILLION SINCE JULY
US INVESTMENT bank JPMorgan Chase & Co incurred losses of about $1.5 billion since July, hurt by turmoil in the credit and mortgage markets and by wider credit spreads and lower levels of liquidity, the company has said in a regulatory filing.
JPMorgan said trading conditions have "substantially deteriorated" in the third quarter compared with that of the second, and spreads on mortgage-backed securities and loans have "sharply widened". The estimated losses exclude hedging, the firm said. In addition, if the bank's own credit spreads tighten, the change in the fair value of certain trading liabilities would also hurt trading results, JPMorgan said. The third-largest US bank was forced to write down the value of its $33 billion in mortgage-backed securities as prices continued to drop in July, the Financial Times said, citing people close to the company. The writedowns were partly driven by Merrill Lynch & Co Inc’s recent decision to sell $30.6 billion in risky debt to Lone Star funds for just $6.7 billion, or about 22 cents on the dollar, FT said.
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