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Communities of Leadership: Jamie Dimon’s JP Morgan
No comments · Posted by Scott in Case Studies
In creating Forbes’s recent list of the largest 2000 public companies in the world, the magazine’s methodology gives equal weight to rankings for sales, profits, assets, and market value. By this method, the largest public company in the world is JP Morgan Chase (Jamie Dimon, CEO). According to Forbes (normalized for their survey at the end of 2009) JPM had sales of $115.6 billion, profits of $11.7, assets of $2.03 trillion(!), and a market value of $166.2 billion. The bank was not the biggest on any of the four measures, but across them all, came out top of the list.
Given the huge upheavals in banking, that’s a pretty remarkable performance. JPM managed to dodge most of the bullets in the sub-prime crisis and emerge far stronger than most of its rivals. It became a safe haven for regulators, who famously helped it to acquire Bear Stearns and Washington Mutual, thus both stabilizing the financial system and adding to Morgan’s market weight.
I feel admiration and some pride about Morgan’s status: I worked there for 17 years, up until 1998. At the same time, its current position in the world seems slightly surreal to me. The institution that exists today has both clear elements of the bank I worked for in the 80′s and 90′s and some very different features as well.
For more than thirty years, JPM has been engaged in a challenging effort to remake itself itself, from a commercial into an investment bank. I would say it has now thoroughly succeeded. JPM is now at or near the top of all the investment league tables that count: for example, it was number two (to Goldman Sachs) in global M&A in the first quarter of 2010. After the recent crisis, it seems to me that Goldman and JPM are the two teams to beat in global investment banking. That is a huge victory for Morgan in a decades-long effort.
At the same time, through a series of mergers, Morgan has a massive base in commercial and retail banking. Successive mergers involving Manufacturers Hanover, Chemical Bank, Chase Manhattan, Bank One and Washington Mutual have made JPM a powerhouse in the “traditional” borrow-and-lend style of banking, both for individuals and for businesses small and large. Among U.S. banks, Morgan is the only one to have made what looks like a settled marriage of the investment banking business with retail and commercial banking. Firms like Citi and Bank of America, and their many ancestors-by-merger have really struggled with this challenge. In Europe, banks like Credit Suisse and Deutsche Bank seem to have managed the marriage fairly well, but they lag Morgan in size and global clout at today.
In addition to investment, commercial, and retail banking, Morgan is the world leader in transaction processing services. Always very international in its outlook, its domestic mergers have shifted its center of gravity back toward the U.S. One thing that probably is on Mr. Dimon’s mind is doing more business in Asia. Only 5.1% of revenues come from Asia Pacific, and 92.3% come from the US and EMEA. I venture that the EMEA part is heavily weighted to “developed” Europe.
Once a protege of Sandy Weill at firms that eventually merged and morphed into Citi, Jamie Dimon set his own course that led to becoming CEO of Bank One, then moved into the leadership of JPM following their merger. Although everyone now loves to hate bankers, Dimon has earned a lot of positive press for leading JPM through the recent troubles. Indeed, within the last few days, Bloomberg Finance rated Dimon the top CEO in financial services for delivering value to shareholders in relation to his compensation. For now, Goldman, not Morgan, seems to have inherited the mantle of Lightning Rod Number One.
As I said, JPM is a now an amalgam of many banks. It owes its current stature and culture in some ways to all of them. The old JP Morgan, where I worked, had a special culture of pride in the quality of its work and its people, and in its service to clients.
In 1933, J.P. Morgan the younger, then senior partner of the bank, used these words in testifying before Congress. ” If I may be permitted to speak of the firm of which I have the honour to be senior partner, I should state that at all times the idea of doing only first-class business, and that in a first-class way, has been before our minds.”
These words were known in my day to every Morgan banker; they were a sort of mantra of our culture. You can still find them pridefully displayed on the Morgan website. I expect they are still honoured in the JP Morgan of 2010. From some distance it is hard for me to know how much they have been overshadowed by the unscrupulous selfishnesss so often attributed to all bankers today. I have reason to hope that the higher ideals will prevail.
As a Morgan alumnus, I salute Jamie Dimon and all his colleagues for their remarkable achievements over the last couple of years. I wish them well, and look forward to following their progress. I hope they will be further developing a great institution, always in a “first-class way.”
The growing list of Interesting Communities of Leadership is at http://lovingwork.org/interesting-communities-of-leadership
Scott is scott@lovingwork.org and @scottdowns3 on Twitter.
community · culture · customers · emerging markets · excellence · global · JP Morgan · leadership · values
