By Emily Glazer
J.P. Morgan Chase & Co. is cutting more than 5,000 jobs in
an effort to trim costs and become more efficient.
The cuts already have begun, according to people familiar with
the decision, and are part of a broader industry move toward
Internet and mobile banking. The bank will cut at least 2% of its
current workforce in the next year.
The moves come as the nation's largest bank overhauls its 5,570
branches to rely more on technology and less on human tellers.
Chairman and Chief Executive James Dimon said Wednesday that the
average J.P. Morgan Chase branch would lose one employee over the
next two years, mostly through attrition.
The layoffs are broader, however, affecting all four of the
bank's major business units: corporate and investment banking,
consumer and community banking, asset management and commercial
banking. Some employees in the "controls" part of the bank, such as
those in legal or compliance, also will be affected as the bank
trims departments that have grown markedly over the past few years,
people familiar with the matter said.
J.P. Morgan hasn't publicly detailed the layoffs before, but did
discuss expense cuts in general in a February presentation to
investors. At least 1,000 of the 5,000 layoffs already have been
carried out in the past few months, one of the people added.
The layoffs won't necessarily mean that overall head count at
the bank will continue to fall; J.P. Morgan hires about 40,000
employees each year to fill open positions and add to its new class
of analysts, the person said. And the layoffs aren't anticipated to
be as high as last year's when the bank cut 7,900 mortgage jobs and
exited several businesses.
Despite some resiliency in certain business lines, including
merger advisory and asset management, J.P. Morgan remains focused
on cutting excess costs. J.P. Morgan has trimmed its total head
count in 11 of the past 12 quarters, to 241,145 employees as of
March 31. That is down about 20,000, or 7.7%, from the peak in the
first quarter of 2012.
Other large U.S. banks are tightening their belts as well. J.P.
Morgan's decline from the peak employment compares with a decline
of about 20% at Bank of America Corp. and a decrease of 9.1% at
Citigroup Inc. over the same period, according to securities
filings.
Banks have been scrambling to cut costs enough to counteract
increased regulatory and legal expenses in recent years while
revenue growth has been hurt by low interest rates. J.P. Morgan
also is looking to more sophisticated technologies to automate
work, such as new ATMs or faster trading capabilities. At his
Wednesday presentation, Mr. Dimon said the average branch could
lose two tellers and add one financial adviser as the business of
handling deposits grows more electronic.
"It's cheaper for us and good for clients," Mr. Dimon said.
Under Mr. Dimon, business heads including Daniel Pinto, Gordon
Smith, Mary Callahan Erdoes and Doug Petno are leading the charge
for each of their units, alongside Chief Operating Officer Matt
Zames and Chief Financial Officer Marianne Lake, people familiar
with the matter said.
They began after the bank doled out bonuses in February and the
layoffs will be completed at different times depending on the
function, these people said. That is in conjunction with the bank's
annual budgeting process, which is reviewed with the bank's board
in January, Ms. Lake said in an interview.
Some teams within the bank have been tasked with laying off 2%
to 5% of their employees, these people said.
This year's focus follows the bank's efforts on cost cutting
last year, including relocating employees to less expensive office
space and revising third-party contracts. The push was expected to
bring hundreds of millions of dollars in annual savings, though the
exact amount hasn't been disclosed.
The bank said at its presentation in February that it expects
expenses to drop to about $57 billion in 2015 from $58.4 billion in
2014.
"We won't compromise investment dollars in order to improve
short-term efficiency or performance," Ms. Lake said, adding that
keeping strong controls also is a priority.
The employees laid off or in consideration to be laid off range
in seniority, from junior analysts up to managing directors who can
often earn six- or seven-figure annual pay packages, people
familiar with the bank said. Some employees are being reassigned to
other areas of the bank, some of these people said, although as the
bank exits certain regions, it is harder to redeploy those
employees who don't want to move.
There also is a focus on costs in the corporate and investment
bank, with layoffs expected around technology and operations
employees, the people said.
Write to Emily Glazer at emily.glazer@wsj.com
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