Fitch Ratings said Friday that it has downgraded JPMorgan Chase & Co.'s (JPM) Long-term Issuer Default Rating to 'A+' from 'AA-' and its Short-term IDR to 'F1' from 'F1+'.
Fitch also has placed all parent and subsidiary long-term ratings on Rating Watch Negative.
The rating actions follow JPMorgan's disclosure Thursday of a $2 billion trading loss on its synthetic credit positions in its Chief Investment Office. The positions were intended to hedge the company's overall credit exposure, particularly during periods of credit stress.
While Fitch views the size of loss as manageable, it said the magnitude of the loss and ongoing nature of these positions implies a lack of liquidity. "It also raises questions regarding JPM's risk appetite, risk management framework, practices and oversight; all key credit factors", the rating agency noted.
Fitch believes the potential reputational risk and risk governance issues raised at JPMorgan are no longer consistent with an 'AA-' rating.
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