* BoE's Bailey sees no UK conduct issue at JPMorgan yet
* Losses a "salutary lesson" in use of risk measuring models
* UK banks' Greek exit contingency plans more detailed
By Huw Jones
LONDON, May 24 Trading losses of $2 billion at JPMorgan were due to poor risk management and indicate no local rule breaches for the moment, Britain's top banking supervisor said on Thursday.
"It's bad risk management," Andrew Bailey, Bank of England's executive director for banking supervision, told reporters.
"I don't for the moment see a conduct issue," he said, adding that the United States was the lead regulator for the American banking giant.
"The bottom line is this is predominantly a U.S. issue," Bailey said.
The loss suffered by JPMorgan is a "salutary lesson" in the use of risk models and the danger of over-reliance on single models and swapping from one model to another without realising the implications of what was being done.
"The important message is that none of us can have blind faith in single models," Bailey said in the UK regulator's first comments on the JPMorgan losses.
JPMorgan conducted its trades in London where it is a branch, meaning that U.S. regulators are mainly responsible for day-to-day supervision of operations.
Mary Schapiro, chairman of the U.S. Securities and Exchange Commission said this week that financial firms must disclose changes to models they use to gauge their risk-taking.
When JPMorgan Chief Executive Jamie Dimon announced on May 10 that the company had lost at least $2 billion through "egregious mistakes" in trading, he also said for the first time that the bank had changed its model for measuring Value at Risk (VaR) in the office where the derivatives portfolio was managed.
Bailey also said the contingency plans at Britain's main banks in case of a Greek exit from the euro zone are "becoming more detailed" to address a range of possible outcomes.
"It's detail without certainty. What none of us can say is what the consequences of Greece leaving the euro would be," Bailey said.
He said he was not predicting an exit but the contingency plans were looking at issues such as how redenomination would work.
The plans were more detailed as they were looking at a range of possible ways a Greek exit could happen as there is no knowing how it would happen, Bailey said.
He was speaking on the sidelines of a conference in which he questioned the future of free banking in Britain.