JPMorgan chief Jamie Dimon rallies the troops
Tuesday 17 September 2013
JPMorgan Chase & Co Chief Executive Jamie Dimon said the largest U.S. bank is bracing for more legal and regulatory scrutiny in the coming weeks and months, but outlined a series of steps the company has taken to improve operations in a memo to employees on Tuesday.
JPMorgan, which is already facing a wide range of probes from several regulators and the US Department of Justice, is devoting "unprecedented" resources to fix its risk, legal and compliance operations. Dimon has also begun meeting personally with regulators to improve relationships, he said.
"Unfortunately, we are all well aware of the news around the legal and regulatory issues facing our company, and in the coming weeks and months we need to be braced for more to come,"Dimon said in the memo, which was obtained by Reuters.
JPMorgan has added 4,000 staff to its control groups since 2012 - three quarters of them this year - and increased spending on those efforts by about $1 billion. The bank's control group includes risk, compliance, legal, finance, technology, oversight and control and audit functions.
The bank is also trying to simplify by getting rid of businesses that are not core to its business model, Dimon said. For instance, JPMorgan has stopped selling identity theft protection and credit insurance to customers, Dimon said. Earlier this month, the bank said it was getting out of the student loan business, and is also planning to exit physical commodities trading.
The bank is also conducting a review of its foreign correspondent banking business and paying closer attention to outside vendor partners, Dimon said.
JPMorgan and Dimon himself have come under fire since last year, when a large, money-losing derivatives trade came to light, eventually costing the bank more than $6 billion in trading losses, and leading to the indictment on Monday of two former employees. The bank expects to pay at least $700 million to settle civil law investigations into the matter.
JPMorgan is also facing probes by the US Department of Justice, the Securities and Exchange Commission and other government agencies that are looking into subjects including energy trading, possible bribery in hiring practices in China, and possibly fraudulent sales of mortgage securities.
Dimon did not specify what new legal and regulatory issues he expects the bank to face, but emphasized that JPMorgan's control undertaking was a company-wide priority. After acknowledging mistakes, he said the bank and its employees are "facing our issues and rolling up our sleeves to fix them."
Following the "Whale" scandal, the 57-year-old CEO faced a bruising battle with some shareholders to retain his chairman title earlier this year, and has since been under pressure to improve the bank's relationship with regulators.
In the memo, Dimon said he now personally meets with bank examiners "on a regular basis" and held town hall meetings in May and June for examiners from top US regulators and staff who regularly deal with those examiners.
JPMorgan also has what Dimon described as a "state-of-the-art control room" at its corporate headquarters in Manhattan, from which staff devoted to control and operational risk matters can retrieve data from across the firm to spot problems. Dimon called the control initiative an "unprecedented effort" for JPMorgan Chase.
"Never before have we focused so much time, effort, brainpower, technological power and money on a single, enterprise-wide objective," Dimon said.
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