JPMorgan Chase & Co. (NYSE:JPM) just announced a surprise conference call through a press release. The press release did not state what the nature of the call is concerning. The call was supposed to start at 4:30PM EST but started at 5:03PM
JPM also just released a 10-Q, below are some details:
The Firm is currently repositioning CIO’s synthetic credit portfolio, which it is doing in conjunction with its assessment of the Firm’s overall credit exposure. As this re-positioning is being effected in a manner designed to maximize economic value, CIO may hold certain of its current synthetic credit positions for the longer term.
5:05PM: Jamie Dimon is now talking about changes to VAR
5:06PM: Many errors, sloppiness and all corporate action will be taken. The portfolio still has a lot of risk going forward. Will hold inventory even if there is volatility. Costs could be $1 billion for the holdings.
5:08PM: Basel I will change the same, Basel III will be amended down from 8.4% to 8.3%
5:08PM: Earned $4 billion after tax even after the re-statements
5:09PM: Jamie Dimon will talk more in Q2 and take some questions but will not discuss specific portfolio positions.
5:10PM: The $2billion loss came in the second quarter but there were minor errors in first quarter
5:10PM: Q & A: Does this change capital plans?
5:11PM: We couldnt say anything this week, but it does not change anything.
5:12PM: We review things a couple of times a day, we are willing to lose more money due to volatility.
5:13PM: Earnings power, on a net basis $1 billion does not seem like a big deal?
5:14PM: 1. It could get worse 2. It happened right after the quarter was over 3. We though it would raise questions and we want to answer it best we can.
5:15PM: Change of guidance? No changes on expenses. That could change but for now no.
5:16PM: Change in risk? This was a unique thing, the CIO was great. The $800 million was just this quarter? This quarter currently but it could easily get better or worse, and we think it could change next quarter, but we will not be disclosing every time it changes
5:16PM: Jamie Dimon joked ‘my general counsel would kick me if i was wrong.’
5:17PM: Why did you need to add synthetic credit exposure, what was the need? The original premise was to hedge the company in distressed credit enviroment, our largest holding is in credit.
It was a bad strategy and poorly monitored, but I do not want to give specifics.
5:18PM: How liquid do you view these exposures, how easy would it be to exit? I cannot talk about specific positions, but we have staying power and our willing to use it.
5:22PM: You lost $2 billion in six weeks? We made mistakes, I can repeat it 800 times and I cannot disclose where it will be in the next quarterly release
5:23PM: You prided yourself on being great risk managers, any sense CIO mistakes could be anywhere else? We deserve criticisms but think we run good risk management. We will make mistakes since that happens. This was egregious one.
5:24PM: In hindsight what should you have done? Paid more attention to trading losses.
5:25PM: There are no unrealized gains or losses you can see that in our fillings. We can take those gains, but its usually tax inefficient. This quarter there was $1 billion of gains.
5:26PM: Stock is trading down 6% after hours on the news.
5:27PM: Was the intention of the position to hedge? It did quite well and was there to deliver a positive result. I have already described the outcome.
5:28PM: Is this a business line which will make money? Its not a business line, its a net corporate income from CIO portfolio, this is a lot of things that run through corporate.
5:30PM: We had a lot of cash from WAMU, we made it better, adding talented people. We will continue to manage it, and we have been very careful.
5:31PM: This does not change any aspects related to Volcker rule.
5:31PM: Jamie Dimon wraps up with a thank you.
5:32PM: Stock is down 6.75% in after market trading.