JPMorgan’s Succession Plans for Jamie Dimon May Weigh on Investors

Jamie Dimon in the spotlight

JPMorgan Chase & Co. will host Investors Day on Monday, marking the start of the bank’s busiest year yet.

But Jamie Dimon, the bank’s chief executive officer and Wall Street’s longest-serving incumbent, is expected to outline JPMorgan’s plans for years to come. At the same time, it is very likely that he will face new questions about who will be his successor. The past few days have brought that to the surface as the rival’s plans have been revealed.

JP Morgan is doing great It recently agreed to buy First Republic, the latest deal to bail out troubled financiers.it just highlights How dominant is Dimon’s bank now?: With approximately 4,800 branches in the continental United States and an unrivaled presence, the company’s investment bank consistently outperforms Goldman Sachs and Morgan Stanley. JPMorgan stock has risen 3% this year, well ahead of its biggest competitor.

In some ways, the big challenge for JP Morgan is figuring out where it goes from here. The bank is unlikely to buy any more lenders amid Washington’s anger over how it was allowed to buy the First Republic. Dimon and his team are expected to argue that the problem remains. lots of room to growExpansion of wealth management business, etc.

Who will replace Dimon? He isn’t expected to step down anytime soon (and plans to take an additional $50 million in dividends if he’s still CEO in 2026). But succession plans for two of JPMorgan’s rivals could again pose problems for shareholders.

• Morgan Stanley’s James Gorman announced Friday that he plans to retire within the next 12 months, and the company said it had identified three “very strong” candidates within the company to replace him. .

• Ken Jacobs of Lazard He is reportedly preparing to step down as CEO and will be replaced by Chief Deputy Peter Orzag.

JP Morgan has not disclosed a succession plan, and the firm has seen Dimon’s potential successor leave the bank for years. That said, analysts see Marianne Lake and Jennifer Piepzak as the frontrunners. The two co-run the bank’s extensive consumer business and are expected to speak in detail on Monday about how it will integrate with First Republic.

Whoever replaces Mr. Dimon big shoes to pack: He has become one of the most powerful and influential bank chiefs, whose words carry weight in Washington and who helped the company navigate multiple crises while building a durable business.

Shareholders may ask questions about more thorny issues, JP Morgan faces lawsuits over its relationship with Jeffrey Epstein (Dimon will soon testify on the matter) and JP Morgan over its failed $175 million acquisition of fintech startup Frank. It also includes litigation.

what is going on here

Europe has imposed a record $1.3 billion data privacy fine on Meta. Ireland’s Data Protection Commission announced penalties on Monday, ordering the social media giant to stop collecting and transferring personal data of European Facebook users to the US in violation of EU’s strict data privacy laws. . The ruling comes as the US and EU negotiate a data-sharing deal that will give companies like Meta more legal protections when handling user data.

Seven major countries (G7) oppose China. The coalition’s joint statement defended member states’ efforts to diversify their supply chains as part of “risk aversion.” He also urged the Chinese government to put pressure on Russia to end its aggression against Ukraine and stop its attempts to intimidate Taiwan. G7 leaders also struggled with how to deliver on their commitments to climate change.

China has banned some sales from Micron. Beijing officials have said that “relatively serious cybersecurity issues” were found in the products of a US chipmaker, which could “seriously endanger” China’s national security. The move is the latest attempt by China to bolster its own semiconductor industry while stepping up its attacks on Western companies operating in the country.

Greece’s election results sparked a big rally in stocks and bonds. Greece’s Prime Minister Kyriakos Mitsotakis is heading into another four-year term after his party fared better than polls expected.Ahead of elections, hedge funds was short Greek government bonds bet on more political instability. Greece is on the verge of returning to investment-grade sovereign debt, a dramatic turnaround from its disastrous default in 2010.

Does America need that many local banks?

Treasury Secretary Janet Yellen told bank executives on Friday that the question of how the Biden administration will handle bank takeovers has taken on new urgency in the wake of the Silicon Valley bank failure. may need to trade.

There are still thousands of banks in the United States after consolidation. number of commercial financiers from 9,613 in 2001 to 5,002 in 2020, according to recent parliamentary report. Canada, by contrast, has less than 100.

The Biden administration was largely tough on mergers. Deputy leader of the Office of the Comptroller of the Currency, Michael Hsu, warned: last year Unless the guidelines are tightened, “the risk of approving mergers that undermine competition, harm communities and pose systemic risks increases,” he said.

Department of Justice have expressed similar concerns On the “accumulation of market power” in just a few financial institutions.

But smaller financiers are facing increasing scrutiny. After Silicon Valley Bank collapsed, regulators started to move consider the plan It would subject mid-sized banks with between $100 billion and $200 billion in assets to the same capital requirements and regulations as their larger rivals.

BTIG analyst Isaac Boltanski told Dealbook: “Some parts of the banking ecosystem are calling for consolidation, and that trend is only going to get stronger with more regulation next month. It’s very likely,” he said.

Large banks are expected to resist expansion. JPMorgan Chase’s deal to buy First Republic would give America’s largest financial institution more than 13% of country’s deposits, critics say consumer costs rise and hurt the competition. (That said, JP Morgan is unlikely to buy more banks, and mergers among smaller financial institutions are expected.)

Could this be Washington’s next big battle after the debt limit?

Debt ceiling negotiations take on new urgency

A default doom scenario is just days away, which adds to investor fears. Despite the third round of talks between President Biden and House Speaker Kevin McCarthy scheduled for Monday, futures trading on the S&P 500 Index points to the start of another soft trade.

June 1 is the “hard deadline” to reach a debt ceiling deal. Treasury Secretary Janet Yellen stressed out on sunday. She calculated that the best-case scenario for a so-called X-date, in which no deal is reached or government funding is exhausted, is June 15, about three weeks away. (Economist at Goldman Sachs) saying The viewing date is June 8th or 9th. )

Yellen is expected to provide Congress with a new update on the government’s cash balance this week.

Democrats and Republicans remain divided on key issues. Republicans want spending caps, new work requirements to qualify for federal aid programs, and cuts to help the IRS crack down on tax evaders. Progress has been made in collecting unused COVID-19 funds and capping federal discretionary spending for at least the next two years.

Historically, debt ceiling battles are eventually settled. As usual, the rhetoric on both sides is heated. The wild card this time around: Will extremist lawmakers refuse to compromise and thwart negotiations? Biden: “I can’t guarantee they won’t do crazy things to force defaults.” said on sundayreferring to congressional Republicans who have called for drastic cuts.

Market uncertainty expected to rise further As Signs of investor turmoil are growing. Investors withdrew $7.7 billion from stocks last week, buying lower-risk Treasury bills instead, according to a Bank of America report released on Friday.

“As the United States and China coexist, compete, and pit themselves against each other to determine who sets the geopolitical rules, they court and sabotage groups of emerging powers to gain an edge. This new class of influential nations is the geopolitical upheaval of the 21st century.”

— Goldman Sachs Global President Jared Cohen said, citing countries such as India, Saudi Arabia and South Korea: Key players on the world stage.

next week

For the second week in a row, a parade of Fed officials will appear at the lecture. You can also expect earnings news from big players in the retail and tech industries. Here are some highlights:

Monday: Several regional Fed presidents, including Mary Daly of San Francisco, Rafael Bostic of Atlanta, Tom Birkin of Richmond and Jim Bullard of St. Louis, will speak at various events. Their take on interest rates will probably be the big story.

Tuesday: Lowes, Autozone, Dick’s Sporting Goods and BJ’s Wholesale report earnings, outlining the health of retailers amid rising inflation.

Wednesday: Nvidia and Snowflake reports provide insight into the computer chip and cloud computing market. The Fed has released the minutes of its latest rate-setting meeting.

Thursday: Best Buy, Costco, Doll Tree reports.

Friday: Department of Commerce announced Data on consumer spending, a closely watched indicator of inflation. The University of Michigan also released its latest Consumer Sentiment Report.

speed reading

Information of sale

• Chinese-owned agricultural giant Syngenta Raised $9.3 billion By listing on the Shanghai Stock Exchange. (Bloomberg)

• ExxonMobil is mine lithiumAn important metal for the electric vehicle industry in Arkansas. (WSJ)

policy

best of the rest

• Uber has suspended the company after complaints about an employee panel hosted by diversity chief Bo Young Lee. (New York Times)

• Warner Bros. Discovery CEO David Zaslav said: faced protests in defense of the writer Commencement speech at Boston University. (Hollywood Reporter)

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