JPMorgan Cuts Investment Banking Compensation

Bloomberg reports that the unit set aside $4.91bn for pay in the first six months of the year, enough to compensate each of the 26,553 employees an average of $184,989 for the period, according to  figures posted on the firm's website. That’s down from the first half of 2011, when the firm set aside $211,358 for each of the unit’s 27,716 employees.

The news organisation also reports that JPMorgan has shut down synthetic trading in its CIO unit with the exception of an $11bn short position in 'basically liquid indexes' to hedge other credit assets, Chief Executive Officer Jamie Dimon said in a meeting with analysts Friday. Positions in Series 9 of the Markit CDX North America Investment Grade Index, a credit-swaps benchmark known as IG9 that’s at the heart of much of the loss, were cut by 70%, Dimon said.

The residual portfolio, largely trades in so-called tranches of indexes that wager on the degree to which companies will default together, was transferred to the investment bank, where they have 'the expertise' to manage it, Dimon said.

Finally, Bloomberg reports that JPMorgan had already lost more than $700m on synthetic credit bets and Chief Executive Officer Jamie Dimon was told that number could climb to almost $1bn when he dismissed press reports about the positions in April as a 'tempest in a teapot'.