The financial wreckage from 2008 is still taking its toll on the economy. The largest bank in the US by assets, JPMorgan Chase, announced that it will be reducing its workforce by 4,000 this year and that ultimately the company plans to eliminate 17,000 jobs. The remaining 13,000 eliminations will occur in 2014. Proving that even the biggest of the big boys can’t provide protection from the unemployment line.
For 2012, JPMorgan reported net income of $21.3 billion up 12 percent from last year while revenue was flat at $99.9 billion and expenses moved up by three percent. The reductions were announced by Jamie Dimon during an investor day presentation in Manhattan.
During the downturn many of the larger banks acquired failing banks looking for refuge and JPMorgan is just now trimming the fat. The majority of the reductions will come from the company’s mortgage business, including those that deal with defaults and home lending since volume has declined. However, Kevin Watters, the head of the bank’s mortgage operations, stated that mortgages will remain a core product and the bank plan to increase its market share.
They will also take an axe to the staff of older retail branches. As many consumers move to mobile on online banking these branches are getting less traffic. However, at the same time Chase plans to open more than 200 new locations in 2013 and 2014.
JPMorgan chase is the most profitable of the US banks and cutting expenses will lead to even more profits. I would not be surprised if other fatter banks like Bank of America or Wells Fargo, which have already made significant overhead reductions, chose to cut even further to stay competitive.
As mentioned JPMorgan is first by assets, but only third by number of locations and will have the least number of employees compared to its counterparts including Bank of America, Citigroup and Wells Fargo. This move could make Chase leaner and seal its spot as number one for years to come.
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