J.P. Morgan Chase & Co Chief Executive Jamie Dimon reshuffled managers just below him, signalling that the biggest US bank is preparing for life after its famed boss. The moves come two weeks after J.P. Morgan said it had lost nearly $6 billion from bad derivatives trades on corporate debt, representing a huge black eye for a chief executive long praised for his risk-management skills.
The management moves will mean a number of senior positions are jointly held by two executives. Analysts said the shared responsibility is a response to the trading losses that came from the bank's chief investment office. "What happened in the CIO office was that there weren't enough people taking a close-enough look," said Richard Bove, an equities analyst at Rochdale Securities. "That was a lesson for every division in the company."
This is at least the third management shakeup in three years for the bank, which has long faced questions about who would lead it after Dimon, 56, steps down. In a June 2011 shakeup, reporting lines were streamlined. Dimon has said he likes to move promising executives around to give them experience in different parts of the bank, a management philosophy popularised by General Electric Co.
The moves were being lined up earlier this year, but were delayed when multibillion-dollar losses surfaced in a portfolio of credit derivatives, bank spokesman Joseph Evangelisti said. Mike Cavanagh, 46, and Daniel Pinto, 49, will become co-CEOs of the Corporate & Investment Bank. Cavanagh, who was once chief financial officer for the bank and is now head of Treasury and Securities Services, will oversee lending and investment banking businesses such as merger advisory.
Pinto, who heads the bank's business in Europe, the Middle East and Africa as well as its global fixed-income business, will oversee all trading businesses. Jes Staley, 55, currently CEO of the Investment Bank, will become chairman of the Corporate & Investment Bank, a new position. Cavanagh is a longtime protg of Dimon. When Dimon was president of Citigroup, Cavanagh was chief administrative officer.
In 2000, Cavanagh followed Dimon to help revive Banc One Corp as head of strategy and planning when Dimon became the bank's CEO. When J.P. Morgan Chase bought the Chicago bank in 2004, Dimon became chief operating officer and Cavanagh was chief financial officer, a key position of influence with investors and Wall Street. Two years ago, Dimon shifted Cavanagh to run the division that sells cash management and securities custody services to corporations, and three months ago he deputised his deputy to lead the autopsy of the problems at the CIO.
When Dimon faced analysts earlier this month in an extended earnings call, he deputized Cavanagh to make an extended presentation on what went wrong at the CIO, who was responsible and who was paying the price. Cavanagh's star is rising. But Staley, once seen as a potential successor to Dimon, seems to have been pushed aside, analysts said. Staley, a 23-year veteran who began his career at Morgan Guaranty Trust Co, is taking a new position as chairman of the corporation and investment bank, a title that on Wall Street often signals an ambassadorial role with clients.