Regulation

Dimon, Shareholders Split On Possible JPMC Breakup Review

JPMorgan Chase CEO Jamie Dimon has made his stance clear every time the issue comes back up: JPMorgan is stronger because it is bigger.

At least that's Dimon's perspective — a view that may not be settling quite as well with some of his company's shareholders. In his annual letter to shareholders, Dimon went on, at some length, to say that the “mission-critical” services that big banks can supply are the types of things “regional and community banks simply cannot do.”

“In today’s heated public dialogue, to frame issues as a winner-take-all fight between opposing interests: big versus small, Main Street versus Wall Street” is a tempting view, Dimon wrote, noting that it doesn't align with reality.

“The U.S. financial services industry does not conform to simple narratives. It is a complex ecosystem that depends on diverse business models coexisting because there is no other way to effectively serve America’s vast array of customers and clients," Dimon wrote.

As for JPMC's shareholders?

They are seeking the possibility of an independent chairman in order to determine if breaking up the bank would generate better returns. As cited in a proxy filing today (April 7), the plan would involve waiting for Dimon, the current chairman, to leave JPMC before moving forward with a plan to review the logistics of a breakup.

According to a Bloomberg report, JPMC told shareholders to vote against these proposals. Earlier this year it was determined by the company that "combining the roles of chairman and CEO, together with a strong lead independent director, continues to provide the appropriate leadership and oversight of the firm," the filing read.

The concept of breaking up the bank was shot down both in 2013 and 2015. In 2014, the proposal was removed before it got to the voting stage. The breakup plans proposed would entail JPMC splitting the bank into at least two companies — which would break apart consumer lending from the investment/trading side.

“We recognize management opposes a breakup on the grounds of value generated by scale and synergy,” supporters of the proposal shared, according to the proxy. “Ideally, such arguments will withstand the scrutiny of an independent study.”

Dimon’s annual letter to investors has become something of a reliable sounding board against the regulatory winds that have been blowing through Washington since the financial crisis. In the past, Dimon has noted that the next crisis is sure to be “more volatile” because of new regulations and that consumer credit costs and flat-out denials were on the rise because of regulations that forced banks’ hands.

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