JP Morgan to fork out $4B to improve compliance, risk management

Summary:America's largest bank will spend US$4 billion and hire 5,000 employees to resolve compliance and risk issues, following several probes by U.S. regulators.

JP Morgan Chase & Co has unveiled plans to put up another US$4 billion and 5,000 employees to resolve compliance and risk issues, following several probes by regulatory authorities. 

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Move comes amid scrutiny from U.S. regulators after JP Morgan lost billions in a trading error.

The American banking and financial services provider will dedicate US$1.5 billion to manage risks and comply with regulations, while US$2.5 billion will be set aside for litigation purposes in the second half of 2013, according to a report Thursday by the Wall Street Journal (WSJ). 

It will also add 3,000 new hires in risk controls and another 2,000 across the bank's business lines to work on compliance issues, added a Reuters report, citing sources familiar with the issue. 

The move comes amid increased scrutiny from U.S. regulators following JP Morgan's admission last year it lost US$2 billion in a trading error. Estimates later put losses incurred by the trader, known as the "London Whale", to as much as US$6.2 billion. 

It prompted regulators to launch investigations into the country's largest bank in areas ranging from mortgage-bond sales to overseas hiring practices. 

According to the WSJ, JP Morgan has been subjected to more regulatory enforcement actions than any other U.S. bank and faces at least seven investigations by the Justice Department. Since 2008, the bank has racked up over US$18 billion in legal cost, bigger than any other bank in the country, the report said, citing stats from FBR Capital Markets. 

Topics: Security, Project Management

About

Eileen Yu began covering the IT industry when Asynchronous Transfer Mode was still hip and e-commerce was the new buzzword. Currently a freelance blogger and content specialist based in Singapore, she has over 15 years of industry experience with various publications including ZDNet, IDG, and Singapore Press Holdings. Eileen majored i... Full Bio

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