Fitch cuts JPMorgan Chase's credit rating

The JP Morgan Chase building is seen March 24, 2008 in New York City Chris Hondros/Getty Images

(MoneyWatch) Fitch Ratings has lowered JPMorgan Chase's (JPM) credit rating one day after the banking giant disclosed that one of its trading units had lost $2 billion.

Fitch described the financial impact on JPMorgan as "manageable," but said the scale and and "ongoing nature" of the trading activity that led to the loss "implies" a lack of liquidity at the lender. Fitch cut JPMorgan's long-term issuer default rating from A+ to AA- and trimmed its short-term rating from F1+ to F1. It placed the New York company on review for possible future downgrades.

JPMorgan Chase: London whale swallows $2B

"It also raises questions regarding [JPMorgan's] risk appetite, risk management framework, practices, and oversight; all key credit factors," Fitch added in statement. "Fitch believes the potential reputational risk and risk governance issues raised at JPM are no longer consistent with an 'AA-' rating."

Despite the downgrade, Fitch said JPMorgan has enough capital to absorb the loss and that the bank's capital cushion "compares well" with that of other global banks.

JPMorgan on Thursday disclosed that its Chief Investment Office unit had racked up the loss, which stemmed from trades in credit protection on corporate debt.

  • Alain Sherter On Twitter»

    Alain Sherter is an award-winning business journalist who has written for The Deal, MarketWatch and Thomson Financial Media.

Comments

Market Data

Market News

Stock Watchlist