JPMorgan Chase

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Overview: JPMorgan Chase is a major integrated financial services firm. Its lines of business include:

  • Retail Banking
  • Commercial Banking
  • Financial Advisory Services
  • Investment Management
  • Investment Banking
  • Securities Trading

The retail and commercial banking side of today’s JPMorgan Chase is the result of a series of mergers from 1991 onwards, combining these leading banks:

  • Chase Manhattan Bank
  • Chemical Bank
  • Manufacturers Hanover Trust
  • First Chicago
  • Bank One
  • National Bank of Detroit
  • Washington Mutual (WaMu)

Additionally, JPMorgan Chase acquired 300 branches from Bank of New York in 2006.

Job Openings: See this current list of job openings.

Size: JPMorgan Chase reported these figures as of June, 2008:

  • Employees = 180,000
  • Assets = $1.8 trillion
  • Presence in 60 Countries

At the end of 2010, JPMorgan Chase had 5,286 retail bank branches in the U.S., placing it third behind Wells Fargo (6,314) and Bank of America (5,856). In February, 2011, the company announced an aggressive plan to add up to 2,000 new branches over five years, mainly in California (525 to 700) and Florida (375 to 500). If realized, this expansion would place JPMorgan Chase first in branches in those states. It already has a big lead in its home market, New York, and is only 103 branches behind Wells Fargo in Texas. Source: Bloomberg Businessweek, 6/27/2011.

The actual results of the planned branch expansion have been more modest. In 2011 and 2012, 410 new branches were added, and a net new 200 branches are slated to be opened in 2013 and 2014. Source: “J.P. Morgan Pulls Belt Tight,” The Wall Street Journal, February 27, 2013.

Washington Mutual (WaMu): On September 25, 2008, the Office of Thrift Supervision (OTS) closed failing Washington Mutual and made the FDIC its receiver. The FDIC immediately sold Washington Mutual to JPMorgan Chase for $1.9 billion. Founded in 1889, WaMu grew from a local thrift in the Seattle area into a national giant with branches in 15 states through a series of mergers starting in the 1990s. With this purchase, JPMorgan Chase adds (in addition to the above figures):

  • Assets = $307 billion
  • Expected Writedowns = $31 billion
  • Employees = 43,000
  • Branches = 2,239

JPMorgan Chase expects to achieve economies through branch closures (roughly 10% of its new combined total of nearly 5,400) and layoffs. WaMu already had cut its employee headcount by 30% since the end of 2006, from 61,000 to 43,000. This purchase puts JPMorgan Chase in close contention with Bank of America along multiple dimensions for the title of largest bank in the U.S.

Positives: Though JPMorgan Chase is primarily a banking firm, the JPMorgan division is a major presence on Wall Street with a long history. Another leading Wall Street firm, Bear Stearns, was acquired in March, 2008 at the behest of federal regulators as it slid into insolvency. The Bear Stearns purchase has not yielded any major unpleasant surprises.

Washington Mutual (WaMu) assets came unencumbered by the assumption of any debt or preferred stock from that company. WaMu’s equity investors were wiped out by the OTS and FDIC seizure, and its creditors are likely to suffer a similar fate.

The Washington Mutual purchase gave JPMorgan Chase a long-desired entry into Florida (250 branches), as well as into California (700 branches). Overall, JPMorgan Chase extended its reach into 6 new states, leaving it with branches in 23.

JPMorgan Chase avoided the worst of the mortgage and fixed income crises, and has been posting solid profits subsequently. Total employment is virtually flat from the end of 2007. In announcing Q2 2011 earnings, which were 13% higher than the same period in 2010, CEO Jamie Dimon asserted that no large scale job cuts would occur.

JPMorgan Chase had no problem repaying a $25 billion equity investment from the Treasury Department, pursuant to the $700 billion financial rescue package. The equity infusion was not needed or sought by the company; instead, the Treasury had insisted that several financially-sound firms, including JPMorgan Chase, take equity infusions, in addition to troubled institutions.

Of the six largest banks in the U.S., only JPMC added headcount in the year ended June 30, 2012, up 5.1% to 262,882.

Negatives: JPMorgan Chase is the largest secured creditor of failed Lehman Brothers, with $23 billion of claims.

JPMorgan Chase has an acute branding and image problem. The name of the corporate parent is alternatively presented as JPMorgan Chase (with a space) and JPMorganChase (no space). The former appears to be the official name, but the latter variant is used in the corporate logo. The commercial and retail banking businesses are normally branded simply as Chase, as are bank branches. The private banking, investment banking, money management and financial advisory businesses are branded as JPMorgan. Confusion continues to be rife in the press over the usage of spaces and periods in these corporate names.

Losses due to a mismanaged proprietary trading operation in London, originally estimated at $2 billion by CEO Jamie Dimon in May 2012, had ballooned to $5.8 billion by July 16. This incident belies the firm’s reputation for a strict risk management regime. Bonus clawbacks have been promised as a result.

On February 26, 2013, the bank announced that it would eliminate about 17,000 positions by the end of 2014, to achieve cost savings of $1 billion annually. The targeted jobs are almost entirely in retail banking, 13,000 to 15,000 of them in mortgage servicing. With fewer mortgages delinquent or in default, Chase is finding less need for staff to manage these problem loans. (“J.P. Morgan Pulls Belt Tight,” The Wall Street Journal, February 27, 2013.) However, the actual impact on consumer banking jobs may be even higher, given that the 17,000 figure is a net reduction; headcount is expected to increase in asset management, private banking and commercial banking (“JPMorgan plans to cut 17,000 jobs in two years,” Financial Times, February 27, 2013).

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