JPMorgan may face new questions about succession

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JPMorgan Chase will hold its Investor Day on Monday after one of the busiest starts to the year the bank has had in some time.

But while Jamie Dimon, the bank’s CEO and one of the longest-serving current bosses on Wall Street, is expected to outline his plans for JPMorgan for the coming years, he’s also very likely to face renewed questions about who will succeed him — an issue that has come to the fore after plans surfaced. competitors in recent days.

JPMorgan is going high, Having recently agreed to buy First Republic, its latest deal to bail out a distressed lender. That underscores how dominant Dimon Bank is now: It has nearly 4,800 branches in the continental US, a presence unmatched by any competitor, and its investment bank regularly outperforms peers at Goldman Sachs and Morgan Stanley. JPMorgan stock is up 3 percent this year, and it has far outperformed its biggest rivals.

In some ways, the big challenge for JPMorgan is figuring out where to go from here. The bank likely can’t afford to buy more lenders, amid anger in Washington over how it was allowed to buy First Republic. Mr. Dimon and his team are expected to argue that there is still significant room for growth, including by expanding the wealth management business.

Who will replace Mr. Damon? He’s not expected to step down anytime soon (and is set to raise an additional $50 million if he’s still CEO in 2026). But succession plans at two of JPMorgan’s rivals may re-raise the issue for shareholders:

  • Morgan Stanley’s James Gorman announced Friday that he intends to leave within the next 12 months, as the company has identified three “very strong” internal candidates to replace him.

  • Lazard’s Ken Jacobs is reportedly preparing to step down from the CEO role, with his first lieutenant, Peter Orsage, expected to succeed him.

JPMorgan has not laid out its own succession plans, and the company has seen potential successors to Mr. Dimon leave the bank over the years. However, the main competitors, analysts say, are Marian Lake and Jennifer Pepszak, who jointly run the bank’s broad consumer operations — and are expected to speak at length Monday about how to integrate First Republic.

Whoever replaces Mr. Dimon has a big prestige to fill: He’s become the most powerful and influential bank president, one who carries his word in Washington and who helped the company navigate multiple crises while building an enduring company.

Contributors can ask questions about thorny issues as well, Including the lawsuits JPMorgan faces over its ties to Jeffrey Epstein — Dimon is expected to testify under oath on the matter soon — and over its failed $175m acquisition of fintech startup Frank.

Europe is hit dead with a record $1.3 billion fine for data privacy. Ireland’s Data Protection Commission announced the punishment on Monday and ordered the social media giant to stop collecting and transferring personal data of European Facebook users to the United States in breach of strict EU data privacy laws. The ruling comes as the United States and the European Union negotiate a data-sharing agreement that would give companies like Meta more legal protections when dealing with users’ data.

The Group of 7 is resisting China. A joint statement from the coalition defended members’ efforts to diversify their supply chains as an exercise in “de-risking”. It also pushed Beijing to pressure Russia to end its invasion of Ukraine and stop trying to bully Taiwan. G7 leaders have also grappled over how to meet their climate change commitments.

China bans some sales from Micron. Authorities in Beijing said they had discovered “relatively serious cyber security issues” with the US chipmaker’s products, which could “seriously endanger China’s national security”. The move is China’s latest effort to shore up its own chip industry, while increasing pressure on Western companies operating in the country.

The election results in Greece sent stocks and bonds skyrocketing. Greek Prime Minister Kyriakos Mitsotakis is approaching a new four-year term after his party fared much better than opinion polls had predicted. In the run-up to the election, hedge funds have been shorting Greek bonds, betting on more political instability. Greece has come close to seeing its sovereign debt revert to investment grade, a dramatic turnaround from its catastrophic default in 2010.

The question of how the Biden administration will handle bank acquisitions in the wake of the Silicon Valley bank collapse became a new urgency on Friday, when Treasury Secretary Janet Yellen reportedly told the bank chiefs that more deals may be necessary.

Even after the merger, there are thousands of banks in the United States. The number of commercial lenders It dropped from 9,613 in 2001 to 5,002 in 2020, according to a recent report to Congress. In Canada, by contrast, there are fewer than 100.

The Biden administration has been pretty tough on mergers. Michael Hsu, acting head of the Office of the Comptroller of the Currency, warned last year that unless guidelines are tightened, “there is an increased risk of approval of mergers that reduce competition, harm communities, or present systemic risks.”

The Department of Justice has expressed similar concerns about the “accumulation of market power” in a few lenders.

But smaller lenders face more scrutiny. After the Silicon Valley bank fell, regulators began evaluating a plan to subject medium-sized banks — those with between $100 billion and $200 billion in assets — to capital requirements and controls similar to those of larger competitors.

“There are parts of the bank ecosystem that call for consolidation and that is likely to intensify as we see further tightening in the regulatory regime in the coming month,” Isaac Boltansky, an analyst at BTIG, told DealBook.

Expect resistance to letting the big banks get bigger. JPMorgan Chase’s deal to buy First Republic would give America’s largest lender more than 13 percent of the country’s deposits, a situation that critics say raises costs for consumers and hurts competition. (However, JPMorgan is unlikely to buy more banks and mergers between smaller institutions are expected.)

After Hadddin, Could This Be Washington’s Next Big Battle?

The doomsday scenario of default is only days away, and this is adding to investor anxiety. S&P 500 futures trading points to another weak open despite the third round of talks scheduled for Monday between President Biden and House Speaker Kevin McCarthy.

June 1 is the “hard deadline” for a debt ceiling deal, Treasury Secretary Janet Yellen confirmed on Sunday. I calculated that the best-case scenario on the so-called date X — when the government runs out of money if no deal is reached — was about three weeks away: June 15 (Goldman Sachs economists say the date to June 8 or 9.)

Ms. Yellen is expected to provide another update to Congress on the government’s cash balance this week.

Democrats and Republicans are still far apart on some major issues. Republicans are calling for spending caps, new business requirements to qualify for federal aid programs and funding cuts aimed at helping the IRS crack down on tax evaders. Progress has been made in restoring unspent Covid relief money and in capping federal discretionary spending for at least two years.

Historically, debt limit standoffs go to the wire. As always, the rhetoric was heated on both sides. The wild card this time: Will radical members of Congress refuse to compromise and sabotage the negotiations? “I can’t guarantee they won’t force a default by doing something outrageous,” Biden said Sunday, referring to congressional Republicans who have insisted on deep cuts.

Expect more uncertainty in the market like Signs of investor jitters are increasing. According to a Bank of America report published Friday, investors pulled $7.7 billion out of stocks last week, buying lower-risk Treasurys instead.

– Jared Cohen, head of global affairs at Goldman Sachs, citing countries such as India, Saudi Arabia and South Korea important players on the world stage.

For the second week in a row, a parade of Fed officials will hit the speaker circuit. And expect earnings news from the big names in retail and technology. Here’s what to watch:

Monday: The heads of the Fed’s many regional branches—Mary Daley of San Francisco, Raphael Bostick of Atlanta, Tom Parkin of Richmond, and Jim Bullard of St. Louis—will speak at various events. Their views on interest rates are likely to be a hot topic.

Tuesday: Earnings report for Lowes, Autozone, Dick’s Sporting Goods and BJ’s Wholesale, giving glimpses into the health of retailers amid rising inflation.

Wednesday: Nvidia and Snowflake report, which provides insights into the computer chip and cloud computing markets. The Federal Reserve releases the minutes of its latest interest rate setting meeting.

Thursday: Best Buy, Costco, and Dollar Tree report.

Friday: Publications of the Ministry of Commerce Data on personal consumption expenditures, a closely watched measure of inflation. The University of Michigan also publishes its latest Consumer Sentiment Report.

deals

  • Syngenta, the Chinese-owned agricultural giant, said it is seeking to raise $9.3 billion by going public on the Shanghai Stock Exchange. (bloomberg)

  • ExxonMobil reportedly paid more than $100 million for the rights to mine lithium, a metal critical to the electric car industry, in Arkansas. (Wall Street Journal)

Policy

The best of the rest

  • Uber suspended diversity chief Bo Young Lee after complaints about a staff panel it hosted. (The New York Times)

  • David Zaslav, CEO of Warner Bros. Discovery, pro-book protests at Boston University, where he was giving the inaugural address. (Hollywood Reporter)

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