JP Morgan Chase is one of the world's biggest financial services institutions, and the #1 US bank by revenues since 2011, when it first overtook troubled rival Bank of America. It combines the investment banking expertise of the legendary JP Morgan brand with the broad-based consumer services of the former Chase Manhattan bank. Between 2001 and 2004, the economic downturn forced the group to lean more heavily on its financial services businesses to counter the sharp ups and downs of corporate banking. As a result, JP Morgan acquired retail banking giant Bank One in 2004 in a $60bn deal that put it close behind Citigroup, then the US leader. The unprecedented turmoil in global financial markets during 2008 provided JP Morgan with two further opportunities, the last-minute purchases of failing investment bank Bear Stearns and thrift bank Washington Mutual. The resulting business offers a broad base, deriving its income more or less equally between investment banking, retail banking and credit card services. During 2013 the bank was stung by a series of massive fines and settlements to resolve a host of different regulatory investigations.
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Recent stories from Adbrands Weekly Update:
Adbrands Social Media 28th Aug 2018: "Mama Said Knock You Out". Droga5's new campaign for US bank Chase makes good use of tennis legend Serena Williams, who appears to have reinvented herself as some form of Super Earth Mother since the birth of her daughter. Little Alexis Olympia is already one of the most famous babies in America, and she has yet even to reach her first birthday. The tendency of US sports fans to elevate their biggest stars (and their children) to Godlike status in this fashion leaves us cold, we must confess, so we're not perhaps as blown away by this film as Serena's hardcore followers might be. However, it certainly has style and class, and we can see that, for some viewers, it might be a minor classic.
Adbrands Weekly Update 19th Jul 2018: US banks kicked off the reporting season with generally strong results. JP Morgan Chase led the charge as usual, with revenues up 6% to $27.7bn, while net income jumped 18% to $8.3bn, helped by higher interest rates and loan growth (and also of course a lower tax charge). "We see good economic growth, particularly in the US, where consumer and business sentiment is high," said CEO Jamie Dimon. Corporate and investment banking were particularly strong, offsetting declines in mortgages and credit cards. Bank of America took a slight hit on revenues, down very slightly to $22.6bn year-on-year because of a one-off gain in the prior period. Stripping out that exceptional item, comparable revenues were up 3% and net profits soared by 33% to $6.8bn. Citi's results were a little more muted, though revenues rose 2% to $18.5bn. In Citi's case, consumer banking generally fared better than investment banking, though the group's treasury and custody services were the strongest performer overall. Net profit jumped 15% to $4.5bn on the lower tax charge. Wells Fargo is still struggling under the cloud of its customer mistreatment scandals, with revenues down 3% to $21.6bn and an 11% fall in net profit to $5.2bn, despite the lower tax rate. The company said rising interest rates are putting homebuyers off new mortgages. There was much better news from Goldman Sachs, where profits soared 40% to $2.6bn on revenues up 19% to $9.4bn. Goldman also confirmed that Lloyds Blankfein will step down as CEO later this year, and will be succeeded by current president David Solomon. Morgan Stanley also reported a big jump of 39% in profits to $2.4bn - its second highest figure ever after 1Q 2018 - on revenues up 12% to $10.6bn.
Adbrands Weekly Update 18th Apr 2018: American banks enjoyed big profit gains from US tax reforms, as well as generally upbeat business sentiment. Net income at JPMorgan Chase jumped by 35% to an all-time record for the bank of $8.7bn, while Bank of America grew 30% to $6.9bn. However both were beaten in percentage terms by Morgan Stanley whose net earnings jumped by 38% to $2.7bn. Goldman Sachs was the next biggest profit jumper, up 26% to $2.8bn, while Citi was up 13% to $4.6bn. Wells Fargo gained 5% to $5.9bn, but said it might be required to restate those figures at a later date to accommodate a forthcoming $1bn regulatory settlement over mis-sold car insurance and mortgage fees. The lower tax rate alone generated a combined total of $2.9bn in extra profit from the six companies. Yet despite those big gains, investors were generally unimpressed by the lack of any significant growth in lending to businesses and consumers. That was one of the key underlying motivations for Republicans' tax reforms: to encourage borrowing and growth in the wider economy. So far, there's no sign of that, as JPMC finance chief Marianne Lake admitted: "I think we have to recognize that tax reform is in its early stages." As far as revenues were concerned, JPMC remained the clear leader among US banks with 12% growth to $27.9bn, but reigning #2 Wells Fargo slipped back to $21.9bn - it was the only bank to report a year on year decline. That allowed BofA to reclaim second place with $23.1bn. Citi had $18.9bn. Morgan Stanley topped Goldman again with $11.1bn to $10.0bn respectively.
Adbrands Weekly Update 1st Feb 2018: JP Morgan Chase elevated two senior managers to the position of joint president & COO under CEO Jamie Dimon. That effectively sets up a potential succession test ahead of Dimon's eventual departure, probably in 2022. The two promoted managers are Daniel Pinto, head of the corporate & investment bank, and Gordon Smith, head of the Chase consumer business.
Adbrands Weekly Update 18th Jan 2018: Most US companies will take an exceptional hit in their 4Q results from President Trump's tax reform bill, not least the big banks who kicked off the reporting season this week. The cut in the US corporate tax rate will significantly benefit all companies in the future but it creates a short-term problem for businesses that accumulated big losses during the 2008 financial crisis which they had intended to set off for tax purposes against future profits. A lower tax rate will make those deferred credits harder to use, so they now mostly have to be written off. That's a bigger issue for some companies than for others. JP Morgan Chase took a $2.4bn charge for the final quarter of 2017, causing full year net income to slip by 1% to $24.4bn. Reported revenues surged by 4% to $99.6bn, still a little shy of 2009 and 2010's $100bn-plus figures. Retail and investment banking were both flat or slightly down, and the strongest growth came from commercial banking.
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Free for all users | see full profile for current activities: JP Morgan Chase was created in 2000 from the acquisition of legendary investment bank JP Morgan by commercial banking giant Chase Manhattan. Between them those two companies and their predecessors had already played an integral part in the creation of the modern US economy, and especially in the elevation of New York into the nation's most prominent city and the world's foremost financial centre.
The Manhattan Company was founded in the last year of the 18th century in a New York plagued by yellow fever. It was generally believed that the disease was being spread through the fast-expanding city's untreated water supply, and the creation of a new hygienic supply was entrusted to a private company in order to get around the fierce competition which existed between rival municipal bodies. The company's founders also made allowance that any surplus financial capital should be used to establish a bank, later The Bank of the Manhattan Company. The water company dwindled, and this side of the business was eventually sold to the city in 1808. Meanwhile the bank prospered, playing a significant role in the development not only of New York City but the nation as a whole, financing among other projects the building of the Erie Canal, which connected the Hudson River and the Atlantic Ocean to the Great Lakes in 1859. As the economy grew, numerous other banks sprang up to serve the city's needs, including Hanover Bank, Manufacturers' Bank of Brooklyn and in 1877, the Chase National Bank, founded by septuagenarian currency dealer John Thompson and named in honour of Salmon P Chase, former Secretary of the Treasury and original architect of the US national bank system. However the most important of these start-up banks was to be the Chemical Bank of New York, spun out of a local chemical manufacturing firm in 1851.
As commercial banks expanded during the course of the 19th century, so too did the number of merchant banking companies which took advantage of America's new wealth to invest in European projects. In 1854, an American named Junius Morgan became the senior partner in a merchant banking firm in London, firmly established as the world's most important financial centre. The firm was subsequently renamed JS Morgan & Co. In 1860 Morgan Sr established his son, John Pierpoint Morgan, as his agent in New York, serving as a sales and distribution arm for the European securities being underwritten in London. Pierpoint Morgan later struck several partnerships of his own. The most significant of these was with Philadelphia banker Anthony Drexel to establish Drexel, Morgan & Co in New York in 1871. This firm changed its name to JP Morgan & Co in 1893 following Drexel's death.
A Paris office was also established in 1871, initially to supervise a hugely risky £10m pound loan to the besieged government of France during the Franco-Prussian War. Following his father's death in 1890, J Pierpoint Morgan consolidated the separate investment banks in New York, London and Paris under his control, and went on to forge an unrivalled reputation for himself as "the mightiest personal force in American business life". Offering both commercial and investment banking services, JP Morgan was instrumental in financing many of the enterprises that established the United States as a modern industrial power, including US Steel, General Electric, AT&T and several other prominent corporations. Following his death in 1913, his son JP ("Jack") Morgan invested heavily in the beleaguered British economy during the First World War, and later reaped the initial rewards of the huge global prosperity which followed in the 1920s.
However that prosperity was all but erased by the Great Crash of 1929, in which more than 5,000 banks and investment companies went out of business in the US alone, and millions lost their jobs. In order to avoid a repeat of this catastrophe, the government passed the Glass Steagall Banking Act of 1933 which prevented companies from being involved in both commercial and investment banking at the same time. As a result, JP Morgan & Co took the decision to concentrate on commercial banking and shut down its investment banking activities. (Henry Morgan, one of Jack's sons, and a handful of other JP Morgan partners and employees left to form the investment bank Morgan Stanley in 1935).
By now the commercial banking environment was dominated by Chase National Bank. During the Roaring 1920s, both Chase and The Bank of Manhattan has expanded dramatically, acquiring a string of smaller rivals. By 1928, Chase had become the country's biggest bank with assets of more than $1bn. In 1930 it acquired Equitable Trust from the Rockefeller family, making it the world's biggest bank as well. Manhattan was not far behind, having swallowed up more than 20 of its competitors since 1918. Weathering the storm of Depression, followed by World War II and then a new age of prosperity during the 1950s, Chase, Manhattan and JP Morgan all continued to thrive. Chase established itself as one of the country's foremost corporate lenders, while Manhattan became one of New York's biggest retail banks. In 1955 the two merged to form Chase Manhattan Bank. In the 1960s and 1970s, Chase Manhattan expanded its operations internationally, establishing offices around the world, and within the US through the launch of a hugely successful credit card. However the company suffered badly from the oil crisis of the 1970s and the real estate crash of the 1980s. This led to a certain amount of retrenchment, including the eventual closure of all its international outposts.
During the 1980s, the complexion of the world banking industry began to change once again. JP Morgan had also expanded dramatically, reversing into much larger commercial lender Guaranty Trust Company to form Morgan Guaranty. But lending was beginning to be become less profitable. At the same time it was becoming increasingly apparent that the limitations imposed on financial institutions in the US by the Glass-Steagall Act of 1933 were less relevant. JP Morgan had maintained its investment banking activities in Europe, and canvassed US regulators to remove restrictions in its home market. As a result in 1989 the Federal Reserve removed some of these restrictions, and JP Morgan became the first US commercial bank allowed to underwrite corporate debt. A year later, the group was granted permission to underwrite and deal in corporate equities as well, allowing it to take advantage of the renewed economic boom of the decade that followed.
Meanwhile, the old Chemical Bank of New York had also kept pace with consolidation within the industry, acquiring several rivals including Texas Commerce Bank in 1987 and Manufacturers Hanover ("Manny Hanny") in 1991. However the most ambitious deal launched by Chemical's CEO Walter Shipley was a $9.8bn takeover of Chase Manhattan in 1996. The latter was struggling with downturns in profitability, and the merger with Chemical - which adopted the Chase Manhattan name - created the largest bank holding company in the United States. Yet another mammoth merger was initiated four years later when Chase agreed to acquire JP Morgan for $33bn to form the current group. The same year, asset management company Robert Fleming, operating in the UK and Asia-Pacific, was acquired by Chase for around $2.6bn.
In 2003, in the general fallout from the various financial scandals that rocked corporate America a year earlier, JP Morgan agreed to pay a $135m fine from the SEC related to its involvement with failed energy giant Enron, as well as $25m to settle allegations that it broke rules governing the allocation of shares in IPOs in 1999 and 2000. A subsequent civil lawsuit cost the group another $425m in 2006. Virtually all the major US banks were charged with artificially boosting IPO share sales by inducing clients to buy stock on favourable terms. In July 2004, JP Morgan agreed to pay a further $50m to settle charges that it had allowed improper trading of mutual funds. Shortly afterwards the group said it would increase its provision for any future lawsuits related to Enron, Worldcom or other corporate failures by $3.7bn to $4.7bn. In March 2005, a few days after Worldcom's Bernie Ebbers was found guilty of committing that $11bn fraud, JP Morgan agreed to pay $2bn to settle investors' claims that it had not adequately investigated the company's finances before recommending its shares. In June it settled a class action lawsuit from Enron investors led by the University of California with a payment of around $2.2bn.
Despite these legal challenges, the group continued to expand its scope. The most significant development was the announcement in January 2004 of plans to acquire smaller rival Bank One for around $58bn in stock. The deal was completed mid-year. JP Morgan Chase head William Harrison stepped down as CEO of the merged group at the end of 2005, and was replaced by Bank One's James Dimon. Harrison remained chairman until the end of 2006, when that role too was inherited by Dimon. He has overseen further expansion of the business, not least through two canny acquisitions struck amid the turmoil of 2008's global financial crisis.
First established in 1923, Bear Stearns was one of the last "old school" investment banks, an aggressive predator which appeared to thrive on high-risk, even higher-reward gambles. Despite the more sober atmosphere which began to prevail in the investment banking industry after the economic downturn of 2001, Bear Stearns continued to pursue a rapacious approach more reminiscent of the glory days of Wall Street's 1980s boom. It was widely admired for many years for this brazen stance, but the dramatic fallout from the collapse in US house prices began to create a serious problem for Bear Stearns in late 2007 because of its extensive exposure to subprime assets. It was rescued from looming bankruptcy by a cut-price takeover offer from JP Morgan Chase.
Six months later, in September, JP Morgan Chase struck a deal with US regulators to absorb the banking business of failed savings and loan Washington Mutual. At the time of its collapse, WaMu was the sixth largest bank in the US. The business was first established in 1889 to assist with the rebuilding of the city of Seattle, whose business district had been destroyed by a huge fire. Although it grew in steadily in size during the 290th century, it was not until the 1980s that the business joined the senior ranks of the US industry. WaMu relinquished it s mutual status in 1983 and issued an IPO, using these funds to launch a massive acquisition drive. During the 1990s and 2000s, the company expanded dramatically through the purchase of numerous other savings or mortgage banks. One of its biggest purchases was the subprime credit card lender Providian, acquired in 2005 for $6.5bn. However its exposure to subprime mortgages and loans began to create substantial problems during the summer of 2008, and the bank was forced to report huge losses. A markdown in its credit rating in September prompted customers to begin withdrawing their savings from the bank. In the space of ten days, almost $17bn of deposits were pulled out, making the bank technically insolvent and forcing regulators to suspend operations. See full profile for current activities
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