JPMorgan to Suspend $15 Billion Share Buyback Program

Jamie Dimon, CEO of JPMorgan Chase & Co. (NYSE: JPM) told an investor’s conference this morning that the bank would suspend its share buyback program as the company pays down its losses on its credit derivatives trading. The bank announced a $15 billion share repurchase plan in March, following its successful performance on the latest round of bank stress tests.

Dimon also said that the bank would continue to pay dividends, but those payments could also be in jeopardy if the Federal Reserve decides that the derivatives losses threaten the stability of the banking system. Given a choice between two bad alternatives, Dimon and JPM have chosen to retain dividend payments in an effort to keep shareholders at least reasonably happy. By suspending its share buybacks, the bank is hoping to cut off any demand to kill its dividend payments.

The SEC, the FBI, and the Commodities Futures Trading Commission (CFTC) have all launched investigations into JPM’s recently announced trading loss of $2 billion and counting.

As the market continues to slide, JPM’s losses from the trades continue to mount and could top $5 billion. The catch is that no one really knows the extent of the bank’s exposure, probably including even the bank itself.

Shares are down less than -1% at $33.18 in a 52-week range of $27.85-$46.49.

Paul Ausick