The New York Post reports that JPMorgan Chase is thought to be staring a trading loss of up to $250m in the face - 'inopportune' at a time when US lawmakers are considering implementing legal curbs on prop trading.
Although JPMorgan has declined to comment on the story, the newspaper's sources claim that the loss is linked to a arbitrage-trading strategy relating to price differentials in coal in North West Europe and South Africa.
In the meantime, Fox Business News' Charlie Gasparino reports that JPMorgan Chase may end up the big loser in financial reform, as new derivatives rules may force the bank to hold additional capital, and proposals on capping fees on debit cards and the number of branches that can be located in specific geographical areas are likely to impact the firm's bottom line.
Goldman Sachs is said to have undertaken an extensive study on the implications of financial reform, and is thought to have concluded that the larger commercial banks are likely to be most adversely affected by the raft of proposals currently under consideration. Fox quotes one unnamed Goldman executive who, speaking of JPMorgan, said: 'They have many more pressure points than we have'.
Finally, CNBC reports that Rochdale Securities analyst Richard Bove has reduced his price target for JPMorgan Chase from $55 to $44, on concerns over the bank's vulnerability to financial reform.
Bove said: 'We obviously don't know how the bill will finally look, but if we assume there is going to be a change in the derivative situation, think about the fact that JPMorgan might have, in notional value, $45 trillion worth of derivatives. Therefore, it's a very profitable business for them, which in my estimate would be over 10% of their earnings.....If that business is cut back, it will hurt them quiet a bit.....This bill is very Draconian when it comes to JPMorgan'.