JP Morgan Chase 2012 Annual Report Download - page 161

JPMorgan Chase & Co./2012 Annual Report 171
Country risk monitoring and control
The Country Risk Management Group establishes guidelines
for sovereign ratings reviews and limit management. In
addition, the Country Risk Management group uses
surveillance tools for early identification of potential
country risk concerns, such as signaling models and ratings
indicators. The limit framework includes a risk-tier
approach and stress testing procedures for assessing the
potential risk of loss associated with a significant sovereign
crisis. Country ratings and limits activity are actively
monitored and reported on a regular basis. Country limit
requirements are reviewed and approved by senior
management as often as necessary, but at least annually.
For further information on market-risk stress testing the
Firm performs in the normal course of business, see Market
Risk Management on pages 163–169 of this Annual Report.
For further information on credit loss estimates, see Critical
Accounting Estimates – Allowance for credit losses on pages
178–180 of this Annual Report.
Country risk reporting
The following table presents the Firm’s top 20 exposures by
country (excluding the U.S.). The selection of countries is
based solely on the Firm’s largest total exposures by
country, based on the Firm’s internal country risk
management approach, and does not represent its view of
any actual or potentially adverse credit conditions.
Top 20 country exposures
December 31, 2012
(in billions) Lending(a)
Trading and
investing(b)(c) Other(d) Total exposure
United Kingdom $ 23.3 $ 52.6 $ 2.6 $ 78.5
Germany 24.4 36.3 — 60.7
France 14.7 30.3 — 45.0
Netherlands 5.0 29.8 3.0 37.8
Switzerland 24.4 1.5 2.1 28.0
Australia 7.1 16.2 — 23.3
Canada 12.8 5.8 0.6 19.2
Brazil 5.9 13.0 — 18.9
India 7.3 7.9 0.7 15.9
Korea 6.5 7.8 0.6 14.9
China 8.0 3.9 1.3 13.2
Japan 3.7 7.7 — 11.4
Mexico 2.8 6.8 — 9.6
Italy 2.8 4.7 — 7.5
Singapore 3.8 1.8 1.2 6.8
Russia 4.6 1.9 — 6.5
Hong Kong 3.4 2.8 — 6.2
Sweden 3.5 1.9 0.5 5.9
Malaysia 1.5 3.6 0.7 5.8
Spain 3.1 1.6 — 4.7
(a) Lending includes loans and accrued interest receivable, net of the
allowance for loan losses, deposits with banks, acceptances, other
monetary assets, issued letters of credit net of participations, and
undrawn commitments to extend credit. Excludes intra-day and
operating exposures, such as from settlement and clearing activities.
(b) Includes market-making inventory, securities held in AFS accounts and
hedging.
(c) Includes single-name and index and tranched credit derivatives for
which one or more of the underlying reference entities is in a country
listed in the above table.
(d) Includes capital invested in local entities and physical commodity
inventory.