JPMorgan’s coronavirus challenge just got harder

Wall Street’s giants are grappling with an unprecedented test of their business resilience — arguably their biggest challenge since 2008. A potential pandemic is forcing a complete rethink of how they operate, while stock markets plummet amid fears of an economic slump. For JPMorgan Chase & Co, the world’s most systemically important financial institution, the sudden absence of its powerful leader, Jamie Dimon — albeit temporarily — couldn’t have come at a more delicate moment. How the bank navigates the weeks ahead is of concern not just to its investors and customers, but to markets everywhere.
JPMorgan said its co-presidents and co-chief operating officers Daniel Pinto and Gordon Smith were taking over the running of the biggest US lender while their 63-year-old chief executive officer recovers from emergency heart surgery. Dimon, the only leader left to have steered a global bank through the financial crisis, “is awake, alert and recovering well,” JPMorgan said.
Pending his return, it’s essential for the firm — and the financial markets — that the bank manages a speedy and smooth transition to his established lieutenants. Dimon, whose charisma and directness have made him a spokesman for the finance industry, is also the bank’s chairman. That puts a lot of emphasis on the board to get this right. Dimon, who had held court at the bank’s investor day just a couple of weeks back, checked himself into hospital.
Fortunately, unlike some of its peers, JPMorgan appears to have built some genuine strength on the bench. Dimon’s two effective deputies have had broad responsibilities since their appointments two years ago, and they run the firm’s biggest divisions. Pinto has been overseeing the corporate and investment bank, while Smith runs the consumer and community banking division. Their hands-on expertise will be essential as the coronavirus strikes at the bank’s working practices and at its trading and consumer businesses.
As the outbreak spread from Asia into Europe and the US, JPMorgan started dividing its sales and trading desks to restrict the disruption that would occur if an outbreak struck a particular team. Some units are being split between the main offices in New York and London and backup locations such as Brooklyn and New Jersey. While traders might enjoy a spike in volatility, it’s not yet clear how any changes to working practices might affect their operations.
This doesn’t just apply to JPMorgan. Banks have been admirably robust in testing their off-site working capacities. But it’s still not an easy thing to work remotely given the technical and compliance requirements, and — for those working at home — missing the usual cut and thrust of sitting with a team. JPMorgan has also asked thousands of staff across its consumer bank to work remotely as part of resiliency testing.
Dimon’s company is critical to the stability to the financial markets. Under Pinto, its investment bank has grown into a behemoth generating $38.3 billion of revenue.
—Bloomberg