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JPMorgan’s Dimon says US banking turmoil isn’t over, sees long-term repercussions ft

NEW YORK, April 4 (Reuters) – The U.S. banking crisis continues and its impact will be felt for years to come, JPMorgan Chase & Co Chief Executive Officer Jamie Dimon wrote in a letter to shareholders on Tuesday.

“The current crisis is not over yet, and even when it is behind us, there will be repercussions for years to come,” Dimon wrote in a 43-page document. annual message covering a variety of topics, from JPMorgan’s performance to geopolitics and regulation.

The storm clouds continue to threaten the economy as they did a year ago, said Dimon, chief executive of the largest US lender. And the banking system is under renewed stress after the failure of UBS’s bailout of Silicon Valley Bank and Credit Suisse last month.

“The odds of a market downturn have increased,” Dimon wrote. “And while this is nothing like 2008, it is unclear when this current crisis will end. It has caused a lot of market jitters and will clearly lead to a tightening of financial conditions as banks and other lenders become more conservative.” .

Still, it’s unclear whether the disruptions will reduce the consumer spending that drives the US economy, Dimon wrote.

The risks that led to the current crisis were “hiding in plain sight,” Dimon wrote, citing interest rate exposure and the level of uninsured deposits at Silicon Valley Bank.

But he played down the similarities to the global financial crisis. While the 2008 crash affected big banks, mortgage lenders and insurers with global interconnections, “this current banking crisis involves far fewer financial players and fewer problems to solve,” Dimon said.

After taking the helm of JPMorgan in 2006, Dimon presided over the acquisitions of troubled investment bank Bear Stearns and crisis-era Washington Mutual, the savings and loan bank whose failure was the largest in US history. .

Jamie Dimon, Chairman of the Board and Chief Executive Officer of JPMorgan Chase & Co., gestures as he speaks during an interview with Reuters in Miami, Florida, U.S., February 8, 2023. REUTERS/Marco Bello/Photo archive

As the current crisis unfolded, Dimon again played a central role, helping to organize a $30 billion lifeline for First Republic Bank (FRC.N) from 11 major lenders.

JPMorgan, Bank of America Corp (BAC.N), Citigroup (CN) and Wells Fargo & Co (WFC.N) each committed $5 billion, followed by Morgan Stanley (MS.N) and Goldman Sachs (GS.N). , at $2.5 billion each.

Any new regulation in response to the latest turbulence should be “considered,” including clearer rules for dealing with failed banks, Dimon wrote. “Eratic stress test capital requirements and constant uncertainty about future regulations hurt the banking system without making it safer.”

JPMorgan shares have fallen nearly 3% this year from the stock’s previous close, in contrast to a 13% drop in the S&P (.SPXBK) index of broader bank stocks.

The bank’s shares fell 2% to $127.55 shortly after noon.

The company, along with other lending giants such as Bank of America and Citigroup, was inundated with deposits after Silicon Valley Bank collapsed in March, sources familiar with the situation said at the time.

Dimon also took aim at non-bank financial firms, which have become increasingly competitive with banks in providing mortgage, credit card and market making services.

“Could non-bank lending institutions extend credit when their customers need it most?” she asked. “I personally doubt many of them could.”

Reporting by Tatiana Bautzer; Edited by Lananh Nguyen, Leslie Adler, Chizu Nomiyama, and Richard Chang

Our standards: The Thomson Reuters Trust Principles.



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