Internally, senior staff had for years warned the bank's management about the quality of the risk management undertaken by the Chief Investment Office, which is the source of the losses.

The CDS hedges are just part of what looks to have been a systematic mis-management of risk by CIO staff, the majority of whom were based in London, including "the whale".

In the wake of the losses, Jamie Dimon, the bank's chief executive, will be under pressure to reassure investors that there will not be a repeat of this.

JP Morgan might not like the idea of earning less from its deposits, but if it wants to remain the "fortress" Mr Dimon has frequently referred to the bank as being, then the days of taking big punts on credit will have to come to an end and soon.

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