Stung by a huge trading loss, JPMorgan Chase will replace three top traders starting on Monday, including one of the top women on Wall Street, in an effort to stem the ire that the bank faces from regulators and investors.
They are the first departures of leading officials since Jamie Dimon, the chief executive, disclosed the bank?s stunning $2-billion loss on Thursday.
The huge scope of the complex credit bet caught senior bank officials off guard when it began to sour last month and has set off renewed regulatory scrutiny of the industry. Dimon has largely sidestepped blame for the loss, although he has offered numerous apologies for the blunder, the biggest of his eight-year tenure at JPMorgan, the largest bank in the United States.
Ina Drew, a 55-year-old banker who has worked at the company for three decades and is the chief investment officer, stepped aside on Monday. Dimon said Drew?s ?vast contributions to our company should not be overshadowed by these events?.’
JPMorgan said Matt Zames, the bank?s co-chief of global fixed income in its investment bank, will take Drew?s place.
Her exit would be a precipitous fall for a trusted lieutenant of Dimon. Last year, Drew earned roughly $14 million, making her the bank?s fourth-highest-paid officer. From her desk in Manhattan, she oversaw the London office that assembled the trade, a growing unit that oversees a $400-billion portfolio. Two traders who worked for her are also likely to leave shortly.
Dimon, who will face shareholders at the company?s annual meeting on Tuesday, has been on a public campaign of contrition in recent days. Dimon, the famously confident, even cocky, executive, repeated his apologies in a broadcast on Sunday of NBC?s ?Meet the Press?.
?We made a terrible, egregious mistake and there?s almost no excuse for it,? Dimon said, adding that the bank was ?sloppy? and ?stupid?. He also acknowledged that the timing of the loss was a gift for advocates of more stringent regulation.
Drew had tearfully offered to resign multiple times since the scale of the loss became apparent in late April, but Dimon had held off until now on accepting it, said people familiar with the situation.
A skilled trader who once said she relished a crisis, Drew ? and the disastrous trade ? had become a liability for the firm, whose announcement of the loss caused JPMorgan?s shares to plunge 9.3% on Friday. It is unclear what type of severance package Drew will get.
?The bank has taken bigger losses in investment banking and elsewhere, but because of the timing, she is being piled upon as this huge failure,? said a former senior executive, who spoke on the condition of anonymity because of the delicate nature of the situation.
Executives said that within the last several months, Drew told traders at the bank?s chief investment office to execute trades meant to shield the bank from the turmoil in Europe. Drew thought those bets could protect the bank from losses and even earn a tidy profit, these employees said.
But when market tides abruptly shifted in April and early May, Drew?s instructions to traders to trim what had become a gigantic bet came too late to avoid racking up losses. Within the bank, there is also ample frustration that instead of reducing the losses, Drew?s traders may have worsened them.
Besides Drew, Achilles Macris, a top JPMorgan official in London, is expected to depart, as is a senior London trader, Javier Martin-Artajo. Under Dimon?s leadership, the chief investment office has grown substantially in recent years, which until recently was little noticed by analysts and investors.
Some former colleagues said Drew pushed hard for the bank to take calculated risks. She kept a very low profile, bank executives said, at both JPMorgan and Chemical Bank, one of JPMorgan?s predecessor companies. But Drew was not shy with her opinions. She routinely told senior executives in the firm?s trading businesses if she did not agree with their positions.
Former senior-level executives at JPMorgan said the loss was the first real misstep that Drew had experienced, having successfully navigated the financial crisis. They added that the recent trades were not meant to drum up bigger profits for the bank, but to offset risk.
Despite Drew?s low profile beyond JPMorgan Chase she was a passionate advocate for women within the firm. In the largely male word of the banking elite, trading is an especially testosterone-laden niche, but Drew encouraged women to go into trading, arguing that working predictable market hours was actually a benefit in terms of balancing career and family.