JPMorgan Chase & Co.'s biggest U.S. competitors say their corporate investment offices avoid the use of derivatives that led to the bank's $2 billion loss and buy fewer bonds exposed to credit risk.
Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. say the offices don't trade credit-default swaps on indexes linked to the health of companies. JPMorgan is said to have amassed positions in such indexes that were so large they drove price moves in the $10 trillion market.
The loss has prompted shareholders to join regulators in scrutinizing how banks use their investment offices to hedge risks and manage deposits they aren't using for loans. JPMorgan's competitors confine corporate-level trading mostly to interest-rate and currency swaps — the most common derivatives — and put a greater percentage of funds into U.S. government-backed securities such as Treasury bonds.
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