JPMorgan Chase’s chief executive, Jamie Dimon said that US financial power would be hurt if the US bank was split up into smaller banks that couldn’t compete with larger Chinese banks. “America has been the leader in global capital markets for the last 50, 100 years. That is part of the reason the country is so strong,” he said. “As a matter of public policy I wouldn’t want to see the next JPMorgan Chase be a Chinese company.”
Making the case for JPMorgan yesterday, Dimon claimed that banks are under attack from regulators who are zoning in on every issue. “Banks are under assault. We have five or six regulators coming at us on every issue,” Dimon said.
Dimon’s warning comes as US politicians recently indicated they could break up JPMorgan due to fears that its size makes it a risk to both the US and World economy. Dimon said that if regulators want to break up the bank then they cannot stop them. “If the regulators at the end of the day want JPMorgan to be split up, that is what is going to happen. We can’t fight the federal government,” he said.
JPMorgan is paying the price for higher equity capital because the idea to break up the bank, which analysts suggest could be split up into four pieces, has gained momentum since the Federal Reserve announced that because of its size and complexity it would require JPMorgan to operate with more capital than any other bank.
Dimon, who was speaking as he revealed the bank’s fall in revenues and profits in the 2014 fourth quarter, went on to say that “the unscrambling would be extraordinarily complex” as each baby JPMorgan would need “cash management, global trade ability, general ledges, data centres and mirrored data centres and cyber security.”
In late 2013, the bank was hit with a $13bn settlement over sales of bad mortgages and also suffered a $6bn loss from a rogue trader in 2012. In 2014, JPMorgan’s revenues fell three per cent to $22.5bn for the fourth quarter and net income was down seven per cent for the same period. Profits rose in the corporate and investment banking arm but fell in the corporate and private equity unit and in commercial banking, consumer and community banking and asset management.
By Nicole Miskelly, bobsguide Lead Journalist