JPMorgan ‘open for business’ in leveraged loans as rivals get stuck with losses

Jan 13 (Reuters) – JPMorgan Chief Financial Officer Jeremy Barnum told investors the bank is “fully open for business” on leveraged loans, even as other U.S. banks are expected to be at risk last year. recorded significant losses on written-off loans.

“Conditions are good, prices are good, we have the necessary resources,” Barnum said on a conference call with analysts. “We’re totally there. No fuss, no problem.”

Barnum’s comments come after many U.S. banks cut loans to low-quality borrowers last year, as Wall Street’s demand for leveraged loans fell as the Federal Reserve sought to control inflation. Raised interest rates.

After significant losses on debt sales last year, including a $700 million loss on an $8.5 billion loan package that financed the purchase of software maker Citrix Systems Inc., big banks have stepped up to absorb that debt. Choose what you wrote at the beginning of the year.

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Bankers previously told Reuters that about $35 billion to $50 billion of loans remained stuck on banks’ books as they waited for a better market environment.

Last summer, Bank of America co-led a group of banks to provide Elon Musk with $13 billion in debt and bonds to acquire his social media giant, Twitter. Banks have since struggled to get the debt off their books at a reasonable price, choosing to hold the debt instead.

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When asked whether these closed deals will limit lending activity by big banks like JPMorgan, which are less active than their peers, Barnum said the increase is already reflected in rates and banks are able to Has to absorb losses in existing transactions.

“There’s a bit of a narrative that market activity needs to be overblown,” Barnum said. “We’re not convinced it’s true.”

Banks must still market Twitter’s debt and other deals at their market value on their books, setting aside funds for losses reported in the quarter. The exact amount remains to be seen, as banks decide how much to write based on market checks and judgement.

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Bank of America Corp ( BAC.N ) Chief Financial Officer Alastair Borthwick said the company accounts for borrowing in its results, without elaborating on major transactions.

“We target our positions every week,” Borthwick said, “and record profits or losses through these investment banking and trading arms.” “It’s all there, our results reflect what the signs are in each quarter and we follow the process as we do every time.”

Reporting by Matt Tracy; Editing by Lananh Nguyen

Our Standards: The Thomson Reuters Trust Principles.


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