JP Morgan Chase (US)

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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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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.

Adbrands Weekly Update 19th Oct 2017: US banks mostly had a great quarter, as consumer and business lending offset generally lacklustre trading and investment results. JPMorgan Chase led the pack as usual with profits up 7% to $6.7bn on revenues up 3% to $26.2bn, well ahead of expectations. That was despite a shock 21% fall in trading revenues. Bank of America too beat expectations, with net profit of $5.6bn on revenues of $21.8bn. Citi delivered profit of $4.1bn on revenues of $18.2bn. Morgan Stanley also beat predictions as a result of strong performance in wealth management. Perhaps surprisingly, even Goldman Sachs - which has minimal exposure to consumer lending - also did well, with revenues ahead of expectations despite the trading downturn and profits exactly as predicted. The big disappointment - again - was Wells Fargo, still struggling with the fallout from its sales practises scandal. Given its business profile, it should have been the bank most likely to benefit from rises in lending, but actually total loans slipped by 1% year-on-year, compared to gains of 2% to 3% at the other lenders; consumer loans alone were down 3%. Revenues slipped back to $21.9bn - lower than analysts had been anticipating and putting the bank at risk of losing its second place position to BofA - while net profits slumped by 19% year-on-year to $4.6bn as a result of a $1bn charge against regulatory investigations.

Adbrands Weekly Update 20th Jul 2017: Investors had been expecting a weak set of results from the big US banks, with predictions of a sharp slowdown in performance as the initial "Trump Bump" lifting the markets fizzled out during 2Q. In fact, that wasn't the case at all, as a long-awaited surge in consumer and commercial lending, and higher short-term interest rates, offset declines in non-equity investment trading. JP Morgan Chase led the charge with record quarterly profits of over $7bn, up 13% against the year ago period, while revenues topped $26.4bn, well above expectations. Yet, despite those gains, the bank lowered expectations for the year ahead and CEO Jamie Dimon took the opportunity to vent his frustration over the lack of progress by government at implementing policy changes in areas such as regulation, taxation and infrastructure. "It's hurting the average American that we don't have these right policies," he told analysts. "We have become one of the most bureaucratic, confusing, litigious societies on the planet. It's almost an embarrassment to be an American citizen traveling around the world and listening to the stupid shit we have to deal with in this country. We have to get our act together."

Adbrands Weekly Update 20th Apr 2017: Most US banks continued to enjoy a strong boost from soaring post-election markets, aided by weak comps from the year ago quarter. JP Morgan Chase and Citigroup both reported a 17% jump in profits for 1Q, well ahead of expectations. Investment trading and modest recent upticks in lending rates both contributed to growth. JP Morgan's revenues rose 6% and Citi's by almost 3%, also both ahead of consensus forecasts. Bank of America did even better, with profit soaring by 40% on a 7% lift in revenues, while Morgan Stanley enjoyed a spectacular near-71% jump in profits and a 25% surge in revenues. However, there are always losers as well as winners. News from Wells Fargo, still struggling to repair its reputation after the sales practises scandal, was less positive. Revenues dipped slightly and profits were flat, though still above expectations. The big surprise was Goldman Sachs, whose focus on investment banking should have guaranteed strong gains. In fact, results came in well below analysts' expectations, even if they were up strongly against a dismal year-ago quarter. Unlike rival banks, Goldman's revenues from bond and equity trading actually fell year-on-year. "We didn't navigate the quarter well," said newly appointed CFO Martin Chavez.

Adbrands Weekly Update 18th Jan 2017: Here come the 4Qs! As usual it was the US banks who kicked off the reporting season. Most appear to have enjoyed a strong boost from the extraordinary market rally which followed President-elect Trump's selection in early November. JP Morgan Chase reported a 24% jump in 4Q profits, driving up the full-year figure to a record $24.7bn, around 1% higher than the year before. Net income from investment banking for the year was up by more than a third. The biggest lift came from fixed income trading, offsetting a slight decline in the consumer retail banking division. Revenues edged up 2% to $95.7bn. Bank of America also enjoyed a lift, though analysts were disappointed that it wasn't as high as they'd hoped for in the final quarter. Nevertheless, a 13% uptick in net income for the year to $17.9bn was BofA's best result since 2006, on revenues up 1% to $83.7bn. Morgan Stanley and Goldman Sachs also reported stellar results. As expected, Wells Fargo reported a disappointing quarter, its first since the sales tactics scandal erupted in September. Full year net income slipped 4% to $21.94bn despite a 3% increase in revenues to $88.27bn. Despite a much-improved final quarter, Citigroup was even weaker for the year as a whole, with net income slumping 14% to $14.9bn and revenues down 8% at $69.9bn, as a result of higher provisions for credit losses and further eliminations of non-core businesses.

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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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