This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Deutsche Bank Rats Out, Then Cuts JPMorgan

NEW YORK ( TheStreet) -- Two weeks after Reuters reported that Deutsche Bank had applied to be a prosecution witness in the Libor scandal investigation, Deutsche Bank analyst Matt O'Connor on Sunday lowered his rating for JPMorgan Chase (JPM - Get Report), in part because of the Libor scandal investigation.

Among the "regulatory/legal" matters cited by O'Connor in justifying his downgrade of JPMorgan's shares from a "Buy" rating to a "Hold" rating, were "LIBOR, VAR Value at Risk model changes, and CIO loss disclosures," which refer to the hedge trading activity by JPMorgan's Chief Investment Office, which led to $4.4 billion in trading losses, during an otherwise decent second quarter.

Reuters reported on July 15 that Deutsche Bank could "escape with a lighter penalty than other banks in Europe if investigators impose fines in the wake of an interest rate-rigging scandal," since the bank had applied to cooperate with authorities in their investigation under the leniency programs of the European Union and in Switzerland," according to unnamed sources.

JPMorgan's shares were down over 2% in early afternoon trading, to $36.08.

The company on Friday announced the realignment of its wholesale businesses and several changes in the company's top management, including the promotion of current CIO head Mat Zames and Frank Bisignano -- currently in charge of the company's mortgage operations -- to co-chief operating officer positions, beginning in early 2013.

Following a meeting with JPMorgan Chase CFO Douglas Braunstein on Friday, O'Connor said that the company had "delayed some reinvestment of its CIO securities available-for-sale portfolio, which was down to $323b in 2Q (vs. $350b fully invested), while it determines the reinvestment strategy." The analyst also said that JPMorgan's management "reiterated that 2H12 expenses will be higher than expense guidance from Investor Day," by between $1.5 billion and $2 billion.

O'Connor also said that JPMorgan would not comment further on the Libor investigation, beyond CEO James Dimon's comments on July 13 that "it's going to take a while, and not all companies are in the same position," which to the analyst suggests "that JPM thought its LIBOR related risks were less than some others."

The analyst added that JPMorgan still believed that additional mortgage putback charges related to repurchase claims by Fannie Mae and Freddie Mac "are unlikely," and that JPM "again reiterated its commitment to the Universal Bank model."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
JPM $62.13 0.26%
AAPL $128.54 -0.63%
FB $80.90 1.63%
GOOG $573.37 -0.05%
TSLA $202.44 1.44%

Markets

DOW 18,096.90 -106.47 -0.58%
S&P 500 2,098.53 -9.25 -0.44%
NASDAQ 4,967.1410 -12.76 -0.26%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs