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Dimon handed 50% pay cut on 'egregious' London whale error
by Emma Dunkley on Jan 16, 2013 at 14:46
While the global investment bank reaped a profit of $5.7 billion (around £3.6 billion), an investigation into its Chief Investment Office has prompted a stinging pay cut for Dimon.
The division was last year forced to admit to huge losses after a hedging strategy went wrong, clocking up losses of roughly $6.2 billion, sparking fears among investors. As a result, the Financial Services Authority placed the bank under supervision.
As the bank unveiled its fourth quarter 2012 results, which marked more than a 50% rise on the $3.7 billion profit made during the same period the year before, it also revealed its review of the Chief Investment Office in London where the losses were discovered.
The review looked at its board of directors and as a result, a pay cut was handed down to Dimon. As a result, the JP Morgan chief executive will receive only $11.5 million for last year, compared with $23 million the year before.
Addressing the losses, Dimon said they were the result of 'egregious' mistakes the bank had sought to rectify.
'They were self-inflicted, we were accountable and what happened violates our own standards and principles by how we want to operate the company. This is not how we want to run a business,’ he added.
Trying to leave anger surrounding the losses to one side, the bank also said its results revealed a record net income of $21.3 billion for the full year, representing the third consecutive year of record net income. This compares with net income of $19 billion in 2011.
Its asset management arm also had a stellar fourth quarter, with net income hitting $483 million, rising 60% from the previous year.
Net revenue from the private banking arm was $1.4 billion, up from 19% in 2011.
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