At the beginning of this month, analysts at Goldman Sachs made headlines by suggesting that JPMorgan Chase , the nation's biggest bank by assets, would be worth more if it were broken into pieces than it is as a coherent whole.
"Our analysis suggests that a breakup into two or four parts could unlock value in most scenarios, although the range of outcomes we assessed is wide, at 5% to 25% potential upside," the Goldman analysts wrote.
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JPMorgan didn't respond to the report at the time, but 10 days later its chairman and CEO Jamie Dimon took time on its quarterly conference call to offer a number of reasons Goldman's suggestion is, to put it mildly, misguided:
1. Breaking up JPMorgan may seem easy in theory, but it would be very complicated in reality.
2. Separate companies wouldn't benefit from the cost savings and top-line benefits JPMorgan currently enjoys.
3. In times of trouble, like the financial crisis, it's good to have massive banks like JPMorgan.
4. JPMorgan is currently safer than ever.
5. Stock valuations, like those relied on in the Goldman Sachs' report, fluctuate.
6. JPMorgan is currently earning a superior rate of return.
7. America needs large, universal banks.
The article 7 Reasons JPMorgan Chase Shouldn't Be Broken Up originally appeared on Fool.com.
John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs. The Motley Fool owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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