As it works to move past a multibillion-dollar trading loss tied to a complex credit bet, JPMorgan Chase has been reshuffling its management ranks — focusing specifically on the chief investment office, the powerful unit at the center of the soured trade.
The latest move came Thursday, when the bank announced that Craig Delany, most recently the chief operating officer of JPMorgan’s mortgage banking unit, would take the helm of the chief investment office.
It is the fourth shake-up in the executive suite in just over a year. The trading blunder, first disclosed in May, was a rare misstep for the bank’s chief executive, Jamie Dimon, once lauded as one of the keenest risk managers on Wall Street. The losses have dogged JPMorgan Chase, compelling Dimon to explain to Congress what happened and to claw back millions in compensation from executives.
The bank is also contending with investigations by the Justice Department and Securities and Exchange Commission into the trading. The Senate Permanent Subcommittee on Investigations, led by Senator Carl Levin, Democrat of Michigan, is also examining the trades, according to several people with direct knowledge of the investigation.
The appointment Thursday follows a broader reorganization in July. That move was intended to strengthen JPMorgan’s focus on its clients, as profit in other areas is threatened by regulatory changes and the persistent gloom in Europe.
Delany, 41, joins a stable of younger executives, including Matthew E. Zames, 41, and Michael J. Cavanagh, 46, known for their skill at turning around troubled operations.
The promotion of Delany, who will report to Zames, has already spawned speculation about who may succeed Dimon one day. People close to the bank said Dimon, 56, does not plan to hand over the reins for at least five years.
“Craig has been in the center of some of the company’s toughest challenges, including the 2008 financial crisis, the acquisition of Bear Stearns, and helping to lead the turnaround of our mortgage division following the housing collapse,’’ JPMorgan said Thursday.
Much of the management reorganization has focused on the chief investment office, the unit responsible for the trading losses, which have swelled to $5.8 billion. The most notable casualty of the trading mess was Ina R. Drew, who resigned as head of the chief investment office shortly after the losses were announced. Once among Dimon’s most trusted lieutenants, Drew was replaced by Zames in May.
Beyond Drew, other executives at JPMorgan have lost influence as part of the executive overhaul at the bank. In July’s shake-up, for example, the position of Doug Braunstein, the chief financial officer, weakened. He now reports to Zames instead of Dimon. Even executives considered the natural heirs to Dimon lost power in July’s management moves. Jes Staley gave up his day-to-day management of the investment bank.
The management changes send a reassuring message to investors, rattled by the trading misstep, bank analysts said. During its second-quarter earnings call this year, Dimon emphasized that the bank would emerge from its trading debacle stronger.