JPMorgan to cut up to 17,000 jobs by end of 2014
JPMorgan Chase & Co said on Tuesday that it plans to cut 17,000 jobs by the end of 2014, representing about 6.6 percent of the company's overall workforce, as the bank sheds staff that helped it deal with bad home loans.
The bank is optimistic that it can generate record income this year and is planning to add 4,000 employees in commercial and investment banking and credit cards to help it win business, bank executives said at an investor conference.
That hiring will be more than offset by job cuts in areas like mortgage servicing and retail banking, where the bank is positioning for a recovering housing market and new forms of branch banking. The net impact of the additions and cuts will be 17,000 fewer employees on the bank's payrolls.
The job cuts reflect the pressure that banks are under, even as the U.S. housing market and overall economy show signs of recovery. Many banks are looking to automate more of their businesses to make their staff more productive and improve profits.
For example, at JPMorgan's branches, where it plans to cut about 6,000 tellers and other employees, the bank hopes customers will use automated teller machines for every day transactions and that remaining staff can focus on higher-margin activities like selling wealth management services.
JPMorgan is one of the few big U.S. banks that is still adding branches to its network, but it is hoping to staff the branches with fewer workers. The bank's 5,614 branches have 63,500 employees, representing about a quarter of JPMorgan Chase's total. Chase's branch network is second to Wells Fargo & Co's in size.
For overall staffing levels, JPMorgan Chase had 258,965 employees globally at the end of 2012. Its headcount rose following the financial crisis to 262,882 in the second quarter of 2012 from 219,569 in the first quarter of 2009. Since last year's second quarter, staffing levels have drifted lower.
JPMorgan Chase overall earned $21.9 billion last year, excluding accounting charges linked to changes in the value of its debt. The bank said it has the potential to earn about $27.5 billion, thanks in part to efficiency gains. It aims to cut overall expenses by $1 billion in 2013.
To reach the $27.5 billion profit figure, the bank is also counting on costs for lawsuits to fall as disputes over bad mortgages are resolved, as well as seeing a one percentage point rise in interest rates, said Chief Financial Officer Marianne Lake.
The profit scenario also depends on the bank not being hit by another trading debacle like the $6.2 billion loss last year on derivatives trades placed by the London Whale, the nickname given a London-based JPMorgan trader for the size of the positions.
Chief Executive Jamie Dimon acknowledged that many of his top lieutenants who spoke to investors on Tuesday were in new jobs after changes he made last year in his management team and the bank's divisions.
"It is a little bit too much change in one year," Dimon said. "Some of it was the Whale. Some of it was the re-org" to better align product divisions with customer interests, he said.
All of the top executives, however, have been at the company several years and know its businesses, Dimon said.
JPMorgan Chase shares were down 0.2 percent at $47.60 at the close of trading on Tuesday on the New York Stock Exchange.