Bear Stearns lives within JPMorgan 10 years after fire sale

Bloomberg

Ten years ago, JPMorgan Chase announced it would buy collapsing investment bank Bear Stearns Cos. for pennies on the dollar after a weekend of emergency talks brokered by the government to avert a financial crisis.

The move would become a milestone for Wall Street, but it didn’t hold off the meltdown for long. The collapse of a bigger investment bank — Lehman Brothers Holdings — six months later without any emergency takeover or government bailout tipped global markets into a tailspin.

But buying the bond shop has been good for JPMorgan, at least in trading.

Goldman Sachs was once the global market leader in fixedincome trading, generating about twice as much revenue from that business as JPMorgan. The merger with Bear Stearns helped close that gap, and a decade later, JPMorgan has maintained its revenue from that business while many rivals saw theirs slip.

Bear Stearns was a fixed-income powerhouse, even though it ranked only fifth by assets among independent investment banks. The acquisition let JPMorgan scoop up both traders and clients. Barclays, which acquired Lehman’s U.S. operations, has seen its fixed-income trading revenue dwindle by two-thirds since 2010.

Buying Bear Stearns helped JPMorgan on the equities side, too. Its revenues from that business are almost double what they were in 2006, lifting JPMorgan’s franchise to rank third among global banks by the end of 2017.

“With the acquisition, we brought some wonderful colleagues to our firm whose valuable contributions have helped to make JPMorgan Chase the extraordinary company it is today,” Chief Executive Officer Jamie Dimon said in a memo to staff Friday. “I cannot tell you how proud I am of what was accomplished then and in the decade since.”