Jpmorgan reshuffles managers
JPMORGAN Chase, grappling with a $5,8bn loss and a securities industry slump, has promoted Matt Zames to co-chief operating officer in a management shuffle that replaced the head of its investment bank.
Mr Zames, who was enlisted this year to staunch the loss in the firm’s chief investment office, will take the co-chief operating officer role alongside Frank Bisignano, the bank said on Friday. The overhaul catapults Mr Zames, a former fixed-income trader, into the pool of potential successors to CEO Jamie Dimon.
James “Jes” Staley, who ran the investment bank, will relinquish daily operational duties as Mike Cavanagh and Daniel Pinto oversee an expanded version of the division. Mr Staley, once seen as a possible CEO candidate, was moved to a new post as chairman of a unit that combines the investment bank, treasury and securities services and the global corporate bank.
Mr Dimon said he hoped to continue leading the firm for “many, many more years”, and that the shuffle did not indicate any immediate succession plans.
“Mr Staley’s basically becoming a diplomat,” said David Hendler, an analyst at CreditSights in New York. “He’s working on the big picture issues, but the day-to-day activities seem to be gravitating to Mr Cavanagh and Mr Pinto.”
The overhaul combines several of JPMorgan’s units into two new divisions. In addition to the corporate and investment bank, a combined consumer and community banking business will be led by Gordon Smith and Todd Maclin.
“I see this as a continued response to the embarrassment and the gaffe that was the last quarter,” said Michael Holland, chairman of Holland & Company, referring to the chief investment office losses. Mr Holland said it was typical for Mr Dimon to remake the management team, “which after all is the key to all of these successes and failures”.
Mr Dimon said the changes were part of “a normal progression”, and “had nothing to do with anything else”, including the chief investment office’s loss.
JPMorgan rose 3% to $36,89 in New York. The firm’s shares have climbed 11% this year.
The move comes as some finance leaders including former Citigroup CEO Sanford “Sandy” Weill call for the break-up of the biggest US banks, which grew larger after the repeal of the Depression-era law that required companies backed by government insurance to be separate from investment banks.
“JPMorgan and some other large institutions were ports of safety in the storm,” Mr Dimon said, referring to the financial crisis. Breaking them up would make have made them riskier “because they’d be less diversified”, he said.
Mr Staley will hand over “his current responsibilities to new leaders in the business”, JPMorgan said. Within the corporate and investment bank, Mr Cavanagh will head the banking business, which includes investment banking, the global corporate bank and treasury services. Mr Pinto will be the main contact for markets and investor services, which will include fixed income, equities, commodities, prime services and securities clearing.
Mr Dimon said Mr Staley played a role in the decision to change his responsibilities. “Jes himself would always say: ‘When the time comes that it’s time to promote some great new talent, then I should move up,’ ” Mr Dimon said in the interview.
Mr Zames will still be in charge of the chief investment office, the company said. Mr Bisignano, who was appointed to run mortgage banking last year, will hand over that responsibility to Mr Smith, who will become sole CEO of consumer and community banking by the end of next year as Mr Maclin assumes the role of the unit’s chairman.
Chief financial officer Doug Braunstein, who previously reported to Mr Dimon, will report to Mr Zames, Mr Dimon said in a memo to employees. Barry Zubrow, who runs corporate and regulatory affairs, will also report to Mr Zames instead of Mr Dimon, according to the memo.
“It’s a promotion for Mr Zames,” Mr Dimon said in the interview.
In 2009, Mr Zames and Mr Pinto were picked to run fixed income after Staley took over the firm’s investment bank from William Winters and Steven Black.
Under Mr Zames and Mr Pinto, JPMorgan has become the top bank globally in fixed-income trading. The firm’s 17% market share last year was a record for Wall Street, Mr Staley told shareholders earlier this year.
Mr Staley has worked at JPMorgan since 1979, including an eightyear stint as head of the bank’s money-management division.
In the late 2000s, Mr Staley was among executives — along with Winters and Black — who questioned Mr Dimon on why risk controls inside the chief investment office were not as extensive or robust as in other departments, sources said.
Mr Staley told Fortune magazine in April 2010 that he considered himself a contender to succeed Mr Dimon. “If Jamie doesn’t leave, then I probably need to leave myself in a few years,” Mr Staley said. Bloomberg