Morgan Chase’s London losses now top £3.7bn

The losses racked up by disastrous trades at the London office of America’s biggest bank nearly trebled to £3.7 billion.

JP Morgan Chase said a series of botched bets designed to hedge against other investments had created losses of $5.8bn over the first half of the year, much higher than its previous estimate of $2bn.

The bank yesterday revealed that three senior traders associated with the losses – believed to be one known as The London Whale and two other senior managers in London – followed chief investment officer Ina Drew out the door.

The trades had accounted for losses of $1.4bn US in the first quarter and $4.4bn in the second quarter, the bank said.

They contributed to a $400m fall in second-quarter net income to $5bn and the bank revised down its earnings for the first quarter by $459m amid claims some of its traders may have been trying to hide the full extent of the losses.

The London Whale has been widely reported to be French-born Bruno Iksil, who gained his nickname because of the size of the positions he took.

He was understood to be one of the best-paid traders in the City and commuted to London from Paris on a weekly basis.

Insiders at JP Morgan Chase have stressed that he is not a rogue trader, but one of a team whose strategy went wrong.

The trading losses are an embarrassment for the bank that came through the 2008 financial crisis in much better health than its peers.