JPMorgan's investment chief out after massive trading losses

London/New York: JPMorgan Chase & Co sacrificed investment chief Ina Drew yesterday in response to trading losses that could reach $3 billion (Dh11 billion) or more and which have tainted the reputation of the bank's high profile chief executive Jamie Dimon.

The biggest bank in the United States by assets said Drew, its New York-based chief investment officer and one of its highest-paid executives, would retire. The statement confirmed what sources close to the matter had previously told Reuters, that Drew would depart the firm.

It also said Matt Zames would take Drew's position, while Daniel Pinto, currently co-head of global fixed income with Zames, would become sole head of the group.

Mike Cavanagh, CEO of the Treasury and Securities Services (TSS) group, will lead a team of executives overseeing and co-ordinating the group's response to the recent losses.

The statement made no mention of two of Drew's subordinates who were involved with the costly derivatives trades, London-based Achilles Macris and Javier Martin-Artajo, who the sources had also said were expected to leave. Neither could be reached for comment earlier yesterday.

Mismanaged

JPMorgan said Cavanagh "will ensure that best practices and lessons learned are carried across the firm."

The departure of Drew after 30 years at JPMorgan comes after the unit she ran, known as the Chief Investment Office (CIO), mismanaged a portfolio of derivatives tied to the creditworthiness of bonds, according to bank executives.

The portfolio included layers of instruments used in hedging that became too complicated to work and too big to quickly unwind in the esoteric, thinly traded market.

One hedge fund manager who previously ran a proprietary (or prop) trading book at JPMorgan said the bank's public commitments to trim balance sheet risk were at odds with its network of trading silos, who were making bets independently with only a handful of the bank's most senior executives notified of their vast, complex exposures.

"This [CIO] group was completely separate, completely distinct from the prop trading unit. We had no clue about their prop book and they would have no clue about ours for that matter," the manager said.