JPMorgan Chase to cut thousands more jobs
JPMorgan Chase is planning more job cuts in its mortgage business on top of the 13,000-15,000 positions already due to be slashed because of plunging demand for home loans.
Several thousand more cuts are planned, according to people familiar with the matter, and could be announced at JPMorgan's annual investor day on Tuesday. They are part of a new efficiency drive at the largest US bank by assets that also encompasses staffing branches with fewer employees.
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Jamie Dimon, chief executive, and his management team are due to address shareholders for the first time since the bank agreed to a record $13bn settlement with the Department of Justice and regulators to resolve allegations of mortgage mis-selling.
Despite two years of giant legal costs and fraught run-ins with regulators, the investor meeting comes at a time when the bank's share price of $58.03 is close to a record high.
Profitability at JPMorgan remains stronger than at competitors such as Bank of America and Citigroup but the bank is looking to find new savings, partly because of technology that allows greater automation of clerical functions in branches and partly because of a plunge in demand for mortgage refinancings.
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Rising interest rates have stifled demand, causing the biggest banks to cut tens of thousands of positions over the past two years. The additional cuts at JPMorgan are expected to number more than 2,000, evidence of the steep decline in demand even in the past 12 months.
The bank, which employs more than 250,000 people, is also looking to cut thousands of jobs in branches over time, though it expects to do so by attrition.
JPMorgan executives decided in the past 12 months to halt its branch-building programme, following a trend for banks to look online for future growth rather than to bricks and mortar.
The bank is now looking at revamping its existing branch network with smaller buildings that make better use of new technology and require fewer staff. JPMorgan intends to display its "branch of the future" to investors at its Park Avenue headquarters on Tuesday.
Other banks in the US have already backed away from their expensive bank networks. The number of branches in the US peaked at 99,544 in 2009, according to data by the Federal Deposit Insurance Corporation, declining to 96,338 last year.
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JPMorgan held out longer than rivals, filling in gaps in the market in Florida and California, in particular, before now joining the long list of banks to have scaled back their growth plans.
"It was awfully 20th century of them," said Mike Mayo, analyst at CLSA Securities. "With such weak revenue growth – the worst in eight decades – banks need to find new ways to control expenses, which means finding other ways to streamline branches and other distribution. The last two years have seen the most branch closings in history."