Considered one of the largest questions involving JP Morgan, the nation’s biggest and most prestigious bank, involves succession planning: When will its very long time CEO, the king of all banking, Jamie Dimon, step down.
Last week, he gave some clues. It’s “not five years anymore,” he said during JP Morgan’s investor day without elaborating.
Thanks for that, Jamie. Good thing The Post is here to suss out what is occurring contained in the C-suit at JPM, and we are able to report, with a good degree of confidence, that Dimon is signaling he’s out in about two, possibly three years, after he turns 70 years old.
What he does next is, well, anyone’s guess.
JP Morgan stocks fell 4% after Dimon’s announcement. Christopher Sadowski
Even the very hint of a Dimon retirement from JPM caused markets to react. Shares tanked about 4%, and still haven’t fully recovered as this column goes to press. One reason is Dimon’s stature in banking earned by his success rate. Despite a number of blips on the regulatory radar — the London Whale, JPM’s continued business dealings with miscreants like Bernie Madoff and Jeffrey Epstein — Dimon has been amongst essentially the most successful investment executives of our generation. Unlike other big banks, there have been no big scandals, no less than not these days, and shares are up 89% over the past five years.
“He works day-after-day, seven days every week. He’s in all the key meetings, he’s managing risk and selling stuff,” is how one JPM executive explained Dimon’s work ethic. “He has no hobbies and he loves his job. Can’t imagine what he’ll do in retirement.”
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The manager can also’t imagine who can fill his proverbial shoes, and neither can most investors within the stock. They see what most individuals contained in the bank see: A robust CEO who built a fortress balance sheet and business model leaving the keys to the dominion to the B team.
OK, that may be a bit harsh since the entire front runners have successfully run major business lines, even when it’s the present mood of the Dimon-watching crowd on Wall Street. Dimon has arrange a three-way race amongst consumer-banking chief Marianne Lake, co-head of JPM’s investment and business bank Jennifer Piepszak, and Troy Rohrbaugh, the opposite business and investment bank co-CEO. Not exactly Wall Street household names, but for the moment Dimon is playing the hand that he’s got. Edge goes to Lake, I’m told, because she also served as JPM’s CFO and is claimed to be the very best at managing risk.
Reelin’ within the years
Dimon was reportedly inspired by James Gorman’s retirement announcement. REUTERS
So why is he doing it now? Dimon, way back to anyone can remember, kept giving his retirement date a five-year time span; yes, for some reason, retirement has all the time been five years away, until apparently, last week.
My sources cite several reasons for Dimon’s mood swing. First there’s the instance of James Gorman, the now-retired CEO of Morgan Stanley. Gorman had an equally impressive run as CEO and left the corporate in great shape after establishing a rigorously planned horse race between two of his top executives. Gorman left the CEO suite in January and on Thursday, Gorman said he’ll step down as chairman at the tip of the 12 months.
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Dimon is claimed to have marveled on the succession process. The hand-picked favorites, Ted Pick, the top of his institutional business that oversees risk, and Andy Saperstein, the brokerage chief, were under strict orders simply to do their jobs and never lobby the board or him. Let the outcomes speak for themselves.
Each did exactly that and Pick got here out the winner. Saperstein, a valued member of Gorman’s inner circle, stays on the firm due to the seamless nature of the method. There wasn’t the traditional form of bloodletting that goes down when the C-suite changes. Morgan Stanley’s stock is up about 20% over the past 12 months, largely keeping track with the huge rally within the S&P.
Plus, Dimon knows he’s had a very good run and has seen his justifiable share of CEO types stay on well past their prime. Recall how Dimon was defenestrated from Citigroup in a management tussle with Sandy Weill back within the day. He spent a number of years within the wilderness and eventually landed at a regional lender, Banc One. In 2004, he merged it into JPM following its merger with Chemical Bank, which had merged with the old Chase Manhattan Corp.
Dimon became CEO and located himself at the highest of a Wall Street Investment banking empire that might surpass Citigroup in size and stature. Weill, in fact, is long gone. Citigroup would soon face the ignominy of regulatory scandals, reckless risk-taking and diverse bailouts through the 2008 financial crisis, while Dimon earned his king-like status successfully navigating JPMorgan through the mess.
So what does Dimon do next? That relies on whom you speak to. Some people inside JPM say they think he’ll teach on the university level. Friends who return to his Citigroup days tell me he hasn’t given up hopes on running for national office. Remember when he said he might be a greater president than Donald Trump because he’s “smarter” and “as tough” as Trump is? Dimon later apologized but nobody doubts that’s how he really feels.
The most probably scenario for my money, offered by one JPM exec, is that Dimon doesn’t stray far. JP Morgan’s latest Midtown Manhattan HQ is scheduled to open in the subsequent two years and he’d like to do the groundbreaking. That’s why he retires as CEO and stays at JPM as chairman, and lets Lake & Co., do the heavy lifting for a while while he sets the strategic direction and does what he really likes to do: Come to work day-after-day.
