JPMorgan is to take a charge of about $9 billion (€5.8 billion), half as much again as its estimate, to clean up Bear Stearns’ balance sheet and pay for redundancies and litigation arising from its cut-price takeover of the stricken investment bank.
Jamie Dimon, JPMorgan’s chairman and chief executive, told a banking conference organised by UBS that the higher costs were driven by the losses suffered by Bear this year and the larger-than-expected amount of bad assets on its books. Dimon said the charge could end up being up to $1 billion higher or lower.
JPMorgan executives say the final figure will depend on what else they find on Bear’s balance sheet and how easy it is to wind down assets and agree on redundancies. In spite of the higher charge and other losses, Bear was expected to boost JPMorgan’s second-quarter earnings by $1 billion and its total equity by $2 billion – below previous estimates of a $5 billion equity contribution, Dimon said.