Chief Investment Officer Retires From JP Morgan; Bank Reshuffles, Braces For AGM

Tom Burroughes

15 May 2012

The recently-disclosed loss at JP Morgan – said to be at least $2 billion – amid a failed hedging strategy has claimed its first high-level casualty. Yesterday, the US banking giant said Ina Drew, chief investment officer, has decided to retire from the firm after a career of over 30 years.

Matt Zames, co-head of global fixed income in the investment bank and head of capital markets within the firm’s mortgage bank, will succeed Drew as CIO and continue in his mortgage-related responsibilities.

Zames will also join the firm-wide operating committee. Daniel Pinto, currently co-head of global fixed income with Zames, will become sole head of the group. Pinto will also remain CEO of the Europe, Middle East and Africa region, based in London. Among other changes, Mike Cavanagh, CEO of the treasury and securities services group, will lead a dedicated team of senior executives from across the company to oversee and coordinate its response to the recent losses in the chief investment office, the firm said.

Last week’s disclosures have hit the reputation of a bank that has, until now, managed to come through the 2008 financial crisis with its image largely intact, even expanding through such acquisitions as the crisis-hit business of Bear Stearns, for example.

The losses have again highlighted a concern sometimes voiced about large, integrated banking groups when an investment bank has sustained a big loss, as happened late last year at UBS in London due the actions of an alleged “rogue trader”.

JP Morgan is due to hold its annual shareholder meeting today in Florida. A report at Bloomberg said there will be pressure to reclaim incentive pay from employees such as Drew, as well as other staff.

Tribute

"Ina Drew has been a great partner over her many years with our firm. Despite our recent losses in the CIO, Ina's vast contributions to our company should not be overshadowed by these events," said Jamie Dimon, chairman and CEO.

"Matt Zames is a world-class risk manager and executive - highly regarded for his judgment and integrity. And Daniel Pinto is an outstanding leader as well, who has managed markets businesses successfully around the world and is helping us drive our international growth agenda,” Dimon said. He added: "I'm also pleased that Mike Cavanagh is leading our team focused on challenges related to our recent investment losses."