JPMorgan tops list of risky banks: government study

Tue Feb 17, 2015 6:07pm EST
 
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By Douwe Miedema

WASHINGTON (Reuters) - JPMorgan Chase & Co bears the highest potential hazard to the financial system if it were to fail, a staff study released by a U.S. government research agency showed, providing a first-of-its-kind numerical risk ranking of U.S. banks.

The bank had a "systemic risk score" of 5.05 percent for 2013 in a group of 33 large U.S. bank holding companies, the study by staffers at the Treasury Department's Office of Financial Research (OFR) said.

The study's numerical score is a measure of a bank's risk as a ratio of the total risk contained by a worldwide group of banks. The scores are based on metrics such as size, interconnectedness, complexity and cross-border activities, OFR said. (Study: bit.ly/1E5MBc8)

The OFR said the study reflected the views of the authors, not of the office or the Treasury Department. The findings come as U.S. regulators seek to finalize rules for capital buffers big banks need to hold, to make them more resilient and contain systemic risk if one of them were to collapse.

The method is designed by the Basel Committee of global bank regulators, but that body does not publicly release its rankings of the riskiness of banks.

Citigroup Inc ranked second in the amount of havoc it could unleash on the financial system if it were to fail, with a score of 4.27 percent. Bank of America Corp was third at 3.06 percent, followed by Morgan Stanley and Goldman Sachs Group Inc, the study showed.

Goldman Sachs, Morgan Stanley, Bank of America and Citi declined to comment on the study. JPMorgan did not return requests for comment.

John Dearie, executive vice president for policy at the Financial Services Forum, a banking group, said the numbers did not measure whether the largest banks had become safer than before the crisis.   Continued...

 
A sign outside the headquarters of JP Morgan Chase & Co in New York, September 19, 2013. REUTERS/Mike Segar