JPMorgan’s Jamie Dimon Says His Bank Could Lose $4 Billion in China

In Dimon’s letter to shareholders from the bank’s 2015 annual report, the CEO noted that JPMorgan (JPM) does “not expect China to enjoy the smooth, steady growth” the country has seen over the past two decades. “Reforming inefficient state-owned enterprises, developing healthy markets (like we have in the United States) with full transparency and creating a convertible currency where capital can move freely will not be easy,” Dimon states in the letter.

Dimon tells shareholders that JPMorgan has publicly disclosed that it has about $19 billion of exposure in China and that the bank has run a severe stress test to determine potential losses should the country’s economy go seriously awry. The verdict? Dimon says JPMorgan could lose roughly $4 billion in the event that China experiences “a major recession with massive defaults and trading losses,” but the CEO is not particularly worried.

“We do not expect this situation to happen, but if it did, we could easily handle it,” Dimon says, noting that JPMorgan’s China investments are geared more toward long-term growth, which affords some protection in the event of a major downturn. At another point in the letter, Dimon says that interest rates in the U.S. could rise faster than expected in part because, Dimon says, the economic situation in China is stabilizing.

Dimon’s letter touches on a variety of topics, including Brazil’s own shaky economy. Dimon notes that “extreme stress” in Brazil could result in about $2 billion in losses for the bank on roughly $11 billion of exposure.

The CEO also wades into the “Brexit” issue, writing that “one can reasonably argue that Britain is better untethered to the bureaucratic and sometimes dysfunctional European Union.” Dimon goes on to analyze various risks associated with Britain’s potential E.U. departure, such as a negative effect on trade with E.U. member countries that could ultimately hurt both the U.K. and Europe.