Reuters: Regulatory News: BoE's Bailey: JPMorgan loss due to bad risk management

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BoE's Bailey: JPMorgan loss due to bad risk management May 24th 2012, 09:31 LONDON | Thu May 24, 2012 5:31am EDT LONDON May 24 (Reuters) - Trading lossses of $2 billion at JPMorgan were due to poor risk management and indicate no local rule breaches for the moment, Britain's top banking supervisor said on Thursday. "It's bad risk management," Andrew Bailey, Bank of England's executive director for banking supervision, told reporters. "I don't for the moment see a conduct issue," he said, adding that the United States was the lead regulator for the American banking giant. Bailey said the loss suffered by JPMorgan is a "salutary lesson" in the use of risk models and the danger of over-reliance on a single models. "The important message is that none of us can have blind faith in single models," Bailey said. He also said the contingency plans at Britain's main banks in case of a Greek exit from the euro zone are "becoming more detailed" but it was "detail without certainty" on the outcome. He said he was not predicting an exit but the contingency plans were looking at issues such as how redenomination would work. "We actually don't know how it will happen," Bailey said.

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