JP Morgan Financial Risk

Table of Content

Introduction4

Discussion4

History4

Area of specialty5

Investment Bank5

Retail Financial Services6

Commercial Banking6

Treasury and Securities Services6

Asset Management7

Overview of general risk management and controls of the company7

Risk monitoring and controlling8

Liquidity Risk Management8

Deposit Base9

Short Term funding9

Long term funding and Insurance9

Credit Rating9

Credit Risk Management10

Credit loss Provisions11

Market Risk Management11

Risk Measurement Tools11

Operational Risk Management11

How the “Whale Trade” loss happened and what were the flaws?12

The Event12

How Risk Management Practices were deficient13

Model risk13

Lack of Transparency14

Important observations14

Recommendations15

JP Morgan Financial Risk

Introduction

JP Morgan Chase & Co. is US Global banking conglomerate of Investment, Securities and Retail. It is among the world's largest and oldest financial institution. It started it s operations in 1799, New York. It offers financial services to its clients with broad products over 100 countries.

Over the course of its operation, JP Morgan expended it services in more than fifty years, by merging Chase and JP Morgan that are known to e the world leaders in Banking (Derivatives house of the year jp morgan, 2012). Additionally, JP Morgan is formed on the groundwork of more than 1000 forerunner institutions, including JP Morgan & Co., Bank One, Chase Manhattan Bank, Chemical Bank, Manufactures Hanover Trust Co. etc.

JP Morgan brand is the sign of Investment Banking, Discretionary portfolio services, private banking, asset management and Treasury services. However, the Chase brand is associated with the credit card services. By asset, it is the second largest public company.

Discussion

History

JP Morgan has a long rich history, but we have discussed only the Important Mergers that formed JP Merger Chase & Co.:

Many mergers take place to shape JP Morgan, but it started in the early 1990s. Some of the mergers are presented below.

In 1991, Manufacturers Hanover Corp. and Chemical Banking Group merge together to form JP Morgan Chase and Kept the Chemical Banking Corp. name. it became the second largest banking institution in US.

First Chicago Corp. and NDB Banking Corp. merged in 1995, making First Chicago NBD Corporation, the biggest bank in Midwest.

The Chase Manhattan Corporation was formed in 1996, when Chase Manhattan Corporation and Chemical banking Corp. merged.

More mergers were took place in the year 1998, 2000, 2004 and 2009 and finally it formed what today is JP Morgan Chase & Co. when it finally acquired The Bear Stearns, which strengthen its business and capabilities, including cash clearing, prime brokerage and energy trading all over the globe

Area of specialty

JP Morgan is a well-known financial services company; with core functions include investment banking, asset management, private banking, commercial banking and treasury and securities services (Hardie, 2012). The firm has diversified and largest client base all over the world comprises of corporations, hedge funds, high net worth individuals, government, healthcare hospitals, affluent individuals and educational institutions. JP Morgan main business units include:

Investment Bank

J.P. Morgan is the leader in investment banking services, with broad product options. The clientele of investment bank are financial institutions, corporations, institutional investors and government which is totals to about 20,000 clients (Horcher, 2005). JP Morgan products & services include equities, foreign exchange, fixed income, commodities, risk management, emerging market, structured products and ...