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London Losses For JP Morgan Double To $4.4bn

(c) Sky News 2012

US investment bank JP Morgan has admitted that losses from failed hedging bets now exceed $4bn – more than twice its previous estimate.

The bank said it also lowered its first quarter profit by $459m (£296m) after traders in its chief investment office misstated the value of their positions in Q1.

The company said the misstatements reflected material weaknesses in its internal control over financial reporting in the quarter.

In May it announced a loss of $2bn (£1.3bn) over the bets but has now upped the figure to $4.4bn (£2.84bn) as it released Q2 figures.

Net (Frankfurt: A0Z22E - news) income was $4.96bn (£3.2bn) compared with $5.43bn (£3.5bn) a year earlier.

Meanwhile, the trader known as the London Whale, whose was said to have been instrumental in the bad bets, has reportedly left the investment bank.

He was one of three London-based employees to depart over the failed hedging bets.

The Wall Street Journal said Achilles Macris, Javier Martin-Artajo and Bruno Iksil - dubbed the London Whale over the size of his market-moving bets - were taken off the company's internal employment database on Thursday.

CEO Jamie Dimon, during a lengthy media conference on Friday, confirmed all managers involved in the synthetic credit portfolio debacle have left the bank.

"This has shaken our company to the core," Mr Dimon said.

The London team had taken bets that were designed to protect the bank by hedging against its other investments, but the strategy dramatically backfired.

The revelation hit banking shares across the world in May and heightened calls for more regulation in the UK.

Since then the Libor rate-fixing scandal centred on Barclays (LSE: BARC.L - news) has further angered both public and politicians amid calls for tighter banking controls and segregation of investment to retail banking arms.

All three traders worked for the bank's chief investment office, which was run by New York (Frankfurt: A0DKRK - news) -based Ina Drew, a leading investment banker who resigned in May.

The bank said all managers in the London office responsible for the bad trade had been dismissed without severance pay and that it planned to revoke two years' worth of pay from each of the executives.