NEW YORK (Reuters) – Standard & Poor’s Ratings Services on Friday revised its outlook on JPMorgan Chase & Co. and its banking subsidiaries to negative from stable, citing the bank’s disclosure of a $2 billion trading loss, the result of a failed hedging strategy.
The ratings agency also affirmed its A/A-1 issuer credit ratings on JPMorgan.
“We currently view JPM’s risk position as ‘adequate’ and not ‘strong’ (as our criteria define the terms), partially because of the risk on JPM’s balance sheet, which we believe contributes to the need for elaborate hedging strategies,” Standard & Poor’s said in a statement. “Management’s admission that the hedging strategy was ‘flawed, complex, poorly reviewed, poorly executed, and poorly monitored’ contributes to our negative outlook.”
Also on Friday, Fitch Ratings cut JPMorgan Chase & Co.’s credit rating one notch to A-plus from AA-minus.
(Reporting By Luciana Lopez)