JP Morgan Chase, the largest American bank, considers recovering the bonuses from several former and current executives and employees, including former Chief Investment Officer Ina Drew, whose division unveiled on Thursday a loss of $2 billion coming from financial derivative transactions. The bank may cancel share prizes or might ask to repurchase the shares if an employee takes part in actions that cause damage to the institution, financial or to its reputation.
A chief executive of JPMorgan told Bloomberg on condition of anonymity, that the bank could recover the bonuses from executives and employees involved in transactions that caused the loss announced Thursday if the investigation will bring out arguments in support of such measures. The incident that caused Ina Drew’s resignation on Monday will test the bank’s internal policies and mechanisms, amid protests of shareholders about pay practices on Wall Street and the investigation triggered by the authorities on transactions.
Chief Executive Officer of JP Morgan, Jamie Dimon said last week that the strategy that led to the loss of $2 billion was “poorly executed and poorly monitored”, and that the incident provides arguments to persons and institutions that asked for tougher regulation in the banking system. Drew, who has been working for 30 years at JP Morgan, received last year a total package of financial compensation of $14 million, of which $7.1 million in shares, $4.7 million bonus in cash and $750,000 salary. In the last two years, average total compensation received by her amounted to $1.2 million per month.
Dimon said last week that the incident could cause losses close to $3 billion, after thoroughly assessing the damage. Sources close to the situation cited in the international media in recent days have said that JP Morgan is waiting for the resignations of three executives and could lay off all the employees at the London office responsible for the loss of financial derivative transactions.
JP Morgan crisis was commented on Monday evening by the U.S. President Barack Obama, who told ABC that the incident illustrates the need for reform on Wall Street. Obama warned that a similar error at a less stable bank might require government intervention.
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