NEW YORK — JPMorgan Chase is suspending plans to buy back its stock, a little over a week after the bank posted a large trading loss.
The largest U.S. bank by assets disclosed the $2 billion trading loss May 10 in a hastily called conference call with investors and journalists.
The loss from an ill-timed trade on credit derivatives has rattled investor confidence in JPMorgan Chase, leading to a 20 percent decline in the value of the stock since the disclosure, lopping $30 billion off the company’s market value.
The loss also has hurt the reputation of chief executive Jamie Dimon, who has apologized to investors several times.
“It’s an embarrassment; it’s a black mark,” Dimon said again Monday at a conference organized by Deutsche Bank.
Dimon said JPMorgan will continue to pay its quarterly dividend of 30 cents a share. But it will suspend plans to buy back shares because the bank is preparing for new international regulations that force banks to hold more capital to limit the damage from economic downturns.
JPMorgan was scheduled to buy back $15 billion worth of shares through the end of the first quarter of 2013.
Answering an analyst’s question on what made the company suspend its plans, Dimon said it was in response to regulators’ requirements.
He said regulators need large banks such as JPMorgan not only to pass the annual stress tests conducted by the U.S. Federal Reserve but also “to be without stress in a normal environment.” That’s because regulators want banks to be able to easily comply with the new international regulations that go into effect next year.
However, the large losses from the complex trade would make that difficult.
“We’re obviously not going to be making as much money,” Dimon said.
Dimon said he would like the bank to be on a “glide path” to be ready for the new rules.
Dimon’s announcement is an about-face from earlier statements. At a meeting with investors in February, Dimon had said buying back stock helps the company meet regulatory requirements quicker.
“I don’t mind the low stock price,” Dimon had said then. The bank had bought back a lot of stock in 2011 at $36 a share.
