Jamie Dimon is begging for deals. Why is that?

Jamie Dimon appears restless. JPMorgan Chase & Co’s chief executive officer is imploring investment bankers — those most tireless of salespeople — to ring him up and pitch M&A ideas. It’s the clearest indication yet that the biggest US bank would prefer not to sit on its excess capital. That’s a nice problem to have, but one the lender is struggling to solve. The worry is that this pushes it towards a transaction at any cost.
Barred by regulators from buying back stock because of the pandemic and from acquiring a deposit-taking institution in the US because of its size, the Wall Street giant could look to expand in commercial banking outside its domestic market.
When asked if he’d take a look at a European lender, Dimon has said — correctly — that it makes little sense for the world’s most profitable bank to add branches in such a fiercely competitive market, where returns are barely half what JPMorgan makes. Instead, he’s reportedly looking at starting a digital bank in the UK. He may even try to buy an upstart British challenger, Starling Bank, according to some press reports. But that would be small fry.
In Asia, acquiring a lender such as Standard Chartered Plc might propel JPMorgan into higher-growth emerging markets, but taking on the balance-sheet risk and the difficulty in integrating vastly different business cultures would be hard at the best of times. The pandemic just adds to the perils.
Elsewhere, there’s not much point expanding JPMorgan’s capital-intensive investment banking businesses. There’s only so much growth the firm can tap into to put its abundant reserves to work. Over the next year, investment bank activity is expected to shrink after a blockbuster 2020. While the industry remains fragmented, JPMorgan’s dominant trading unit already has an outsize share of many markets. Hedge funds and other big clients might not be so keen on yet more exposure to one firm.
That leaves Dimon with two natural areas of expansion: fintech and asset management. The pandemic has accelerated the shift to digital payments, a business Dimon regrets not having built up sooner. Unfortunately for him, soaring fintech valuations mean large acquisitions would be expensive. Shares in Square Inc, for example, have jumped more than fivefold since March. PayPal Holdings Inc’s 78% price rise since February and JPMorgan’s 11% decline has closed the valuation gap between the two from about $285 billion to roughly $120 billion. Better to wait for the reopening of economies and see whether there’s a readjustment of prices among payment providers.
—Bloomberg