- Ina Drew oversaw JP Morgan office where huge losses were made
- French-born, British-based Bruno Michel Iksil believed to be responsible
- Dubbed the ‘London Whale’, be bragged ‘he could walk on water’
- Believed to be part of Chief Investment Office at heart of bank’s losses
- $14billion wiped from JP Morgan’s value after shares slump 9.3 per cent
- Embarrassment as CEO Jamie Dimon says the bank, which came out of the 2008 financial crisis relatively unscathed, has made ‘egregious mistakes’
- Shares in British banks fall: Barclays, RBS and Lloyds all hit
By Lyle Brennan
PUBLISHED: 05:45 EST, 11 May 2012 | UPDATED: 12:18 EST, 12 May 2012
Wall Street heavyweight: Ina Drew, 54, raked in a huge pay packet last year as head of JP Morgan’s Chief Investment Office
The boss of the British-based trader thought to have cost one of the world’s biggest banks $2billion in trading losses was herself paid $14million last year.
Ina Drew, 54, is considered one of the most powerful women on Wall Street and has been at the head of JP Morgan Chase’s London-based Chief Investment Office since February 2005.
Regarded as a key lieutenant of chief executive Jamie Dimon, she was effectively in charge of Bruno Michel Iksil, the Frenchman nicknamed ‘Voldemort’ and ‘the London Whale’.
She received a cash bonus of $4.7m, a share award of $7.1m, options worth $1.5 million and a base salary of $750,000, according to regulatory filings by the bank.
The bank’s ‘black hole’ – equivalent to £1.2billion – was revealed during its second quarter amid fears Mr Iksil’s trades could cost JP Morgan a further £750 million in the coming months.
Shares in the bank dropped by 9.3 per cent yesterday as U.S. and British regulators launched investigations into the losses.
The verdict from credit agencies has been grim, with Fitch knocking JP Morgan down a rating and Standard & Poor’s putting the bank on a negative outlook.
The slump knocked $14bn off the bank’s equity value in what the Dow Jones index showed to have been the stock market’s worst week of the year so far.
Fellow finance giants Morgan Stanley and Goldman Sachs also suffered as investors predicted the impact would spread.
JP Morgan is America’s largest bank, holding £1.43trillion in outstanding loans and other assets, and employs 240,000 people in 60 countries.
This week it emerged that Mr Iksil works under Ms Drew in the corporation’s Chief Investment Office, where his job was reportedly supposed to oversee mitigating risk.
CEO Jamie Dimon, who admitted JP Morgan had made ‘egregious mistakes’, issued a statement claiming that the bank had hit trouble.
He said: ‘In hindsight, the new strategy was flawed, complex, poorly reviewed, poorly executed and poorly monitored.
Speculation: A London-based trader, dubbed Voldemort after Harry Potter’s nemesis played by actor Ralph Fiennes in the films, is thought to be behind a $2billion loss for America’s largest bank
Speculation is mounting that a British-based trader dubbed ‘Voldemort’ is behind a $2billion loss for America’s JPMorgan bank
‘The portfolio has proved to be riskier, more volatile and less effective as an economic hedge than we thought. There are many errors, sloppiness and bad judgment.
‘It puts egg on our face and we deserve any criticism we get.’
Mr Dimon spoke as U.S. regulator the Securities and Exchange Commission prepared to look into how changes in the way JP Morgan calculates risk might have obscured the potential for these trades to do such colossal damage.
Yet despite the accusations levelled at Mr Iksil, there has been no suggestion that his trading tactics broke any rules.
The Daily Mail has learned that the trader, a father of four in his mid-forties, has been living and working in London for the past seven years.
TRADERS WHO BET THEIR BANKS… AND LOST
U.S. bank Allfirst currency trader John Rusnack pleaded guilty to $691million fraud in 2002 – and was jailed for seven-and-a-half years.
Toshihide Iguchi, a former car dealer, lost more than $1billion at Japanese bank Daiwa in fraudulent trading over an 11-year period from 1984 onwards.
The Bank of Credit and Commerce International (BCCI) was seized by regulators in 1991 after auditors reported huge losses from illegal loans to corporate insiders and trades. It collapsed with $16billion debts and 250,000 savers lost money.
Japan’s Sumitomo Corporation trader Yasuo Hamanaka lost his firm $2.6billion in unrecorded copper market trades and was jailed for eight years in 1996.
British trader Nick Leeson single-handedly destroyed 233-year-old Barings Bank in 1995 by making losses and setting up a secret account to hide them. He was jailed for six-and-a-half years.
In his Bloomberg trading profile he talks of being able to ‘walk on water’ being ‘humble’ but in the City he has been nicknamed ‘Lord Voldemort ‘ – after Harry Potter’s nemesis – along with the names ‘London Whale’ and ‘White Whale.’
He was given the ‘Voldemort’ nickname because he was seen as such a ‘scary and powerful’ force in the City.
One trader explained: ‘It was a play on the Harry Potter theme when people were frightened of Lord Voldemort and his powers and referred to him as ‘’He Who Must Not Be Named”.’
In reality, according to friends and family, Mr Iksil is not a ‘larger than life figure.’ He rents a flat in Earls Court, West London, where he stays from Monday until Thursday.
He then returns to Paris for a long weekend where he spends time with his wife Karen and the couple’s four children.
Last night his sister – 41-year-old Sandrine Iksil – who lives in Leicester and works for a software company in Leamington Spa, Warwickshire, told the Daily Mail: ‘Bruno rarely talks about his work and if you met him you would not think he is a trader in the City.
‘He is very quiet and is a family man. He does not own a flash sports car and his main hobby would be cooking. He enjoys being in the kitchen. He certainly has never talked to me about his work.
‘He also insists on getting home each weekend to be with his wife and children. He works from home on Fridays.
‘I last saw him at Easter when he came to visit with his wife and children. They are just a normal family.’
Mr Iksil’s family originally hails from Russia before his ancestors settled in France.
The dark-haired trader is reported to have earned has earned about $100million (£62.2million) a year for JP Morgan’s Chief Investment Office in recent years.
Mr Iksil joined JP Morgan in 2005 having previously worked at the French investment bank Natixis (KN) from 1999 to 2003.
He originally graduated in engineering from the Ecole Centrale in Paris.
JP Morgan said yesterday they had informed the UK’s Financial Services Authority (FSA) of their situation.
News: The company’s stock plunged almost 7 per cent in after-hours trading after the loss was announced. Other bank stocks, including Citigroup and Bank of America, suffered heavy losses as well (file picture)
Mr Iksil was brought into the CIO unit to head its credit desk, where trades were vetted by management.
The losses are an acute embarrassment for Mr Dimon after JP Morgan was considered in a healthy enough position to take over investment bank Bear Stearns and consumer bank Washington Mutual when they collapsed in 2008. The bank quickly paid off its $25bn federal bailout and initially enjoyed a good relationship with the Obama administration.
In April, when the issue was first raised in financial papers and websites, Mr Dimon dismissed the matter as a ‘tempest in a teapot’. He himself earned a staggering £15 million last year and has publicly opposed new regulations being placed on banks, suggesting he has turned against the President.
JP Morgan’s position has been made more uncomfortable by what those in the City called the ‘Volcker’ effect.
Former US Federal Reserve chairman Paul Volcker – as well as Bank of England Governor Sir Mervyn King – claimed that investment banks should not be allowed to trade on their own accounts.
As regulators continue to figure out how this restriction can be imposed, it remains unclear whether such a rule would have stopped JP Morgan from trading in the way that it did.
Bad news: The trading loss is an embarrassment for a bank that came through the 2008 financial crisis in much better health than its peers. It kept clear of risky investments that hurt many other banks (file picture)
Trying: JPMorgan wants to unload the portfolio in question in a ‘responsible’ manner to minimise the cost to its shareholders. Analysts said more losses were possible depending on market conditions (file picture)