--J.P. Morgan shrinks number of divisions to three: consumer banking,
investment banking, and asset management
--Mike Cavanagh and Daniel Pinto to be co-CEOs of investment banking
--Dimon: Restructuring won't result in layoffs
--CFO Braunstein no longer reports to CEO
J.P. Morgan Chase & Co. (JPM) is consolidating bank divisions and
moved around top executives in leadership structuring, just days after
reporting a massive trading loss while calls to separate investment
banking from commercial banking got louder.
The changes won't result in any layoffs, Chief Executive Jamie Dimon
said in an interview.
The bank will consolidate its consumer-banking businesses and combine
its capital-markets and its trust-and-payment-processing
businesses--shrinking six divisions into three, as asset management
will remain its own division. Mr. Dimon said the changes are intended
to create an organization that is no longer structured around
products, but customer demand. He said the changes, announced Friday,
will create a more efficient bank with lower costs.
As part of the restructuring, Chief Financial Officer Douglas
Braunstein will no longer report directly to Mr. Dimon, but to
co-Chief Operating Officer Matt Zames, according to a memorandum to
J.P. Morgan staff.
In the memo, Mr. Dimon said, "Periodically, all businesses need to
reorganize to set themselves up for continued success. As the global
environment rapidly changes, we need to evolve to position ourselves
around what's best for our clients, as well as emerging trends and
opportunities for growth."
The consolidation also brought the elevation of Mike Cavanagh to
co-CEO of J.P. Morgan's enlarged investment-banking division. Mr.
Cavanagh is the bank's former chief financial officer and Mr. Dimon
put him in charge of unwinding the trading mess created by the
ill-fated attempts to hedge credit risk in London that cost the bank
$5.8 billion in losses so far this year.
Mr. Cavanagh, a potential successor to Mr. Dimon, will lead the
investment-banking business as co-CEO with Daniel Pinto. Mr. Pinto
will focus on investment banking abroad. Current investment-banking
CEO Jes Staley will become investment-banking chairman.
Gordon Smith, the head of the credit-card business, will lead all
consumer-banking and lending businesses as co-CEO with Todd Maclin
until the end of next year, when Mr. Maclin will become chairman of
that business.
Frank Bisignano, the chief administrative officer who is also in
charge of cleaning up the mortgage mess around botched foreclosures,
will become co-chief operating officer of J.P. Morgan, along with Mr.
Zames, who will remain the head of the chief investment office.
J.P. Morgan has been among the banks that not only survived the
financial crisis well, but benefited from it by buying failing
investment bank Bear Stearns Cos. and the thrift Washington Mutual
Inc. Over the last six years, Mr. Dimon repeatedly has outlined in
details how the bank's businesses work together to gain customers.
The restructuring will bring J.P. Morgan's structure closer to those
of Citigroup Inc. (C) and Wells Fargo & Co. (WFC).
J.P. Morgan said "Managing businesses that share similar customers
allows the firm to utilize its collective strengths and expertise to
do more for our clients and to grow our business."
Former Citigroup CEO Sanford "Sandy" Weill had poured cold water on
exactly the kind of organization Mr. Dimon is trying to perfect with
the decision announced Friday.
Mr. Weill, who had fired his protege Mr. Dimon more than a decade ago,
said Wednesday on CNBC big banks should be broken up. Severing
commercial and investment banking would improve the reputation of the
banks, protect taxpayers and reduce complexity, he said.
Former J.P. Morgan chairman William Harrison Jr., who bought Bank One
Corp. in 2004 in part because he wanted Jamie Dimon as his successor
at J.P. Morgan, countered in an interview with Dow Jones that breaking
up big banks into separate commercial- and investment-banking
companies would be "a huge mistake for the United States."
Friday, Mr. Dimon reiterated that clients demand both investment- and
commercial-banking products, so it makes sense to have them combined
in one bank--and one division.
Shares were fell 0.4% in recent trading to $35.66, while most other
big banks' stocks rose slightly.
--Saabira Chaudhuri contributed to this article.
Write to Matthias Rieker at matthias.rieker@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
July 27, 2012 09:15 ET (13:15 GMT)
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