J.P. Morgan Chase & Co. is one of the oldest financial services firms in the world. It is a leader in financial and the largest market capitalization and third largest deposit base in U.S. banking institution.
Formed in 2000, when Chase Manhattan Corporation merged with J.P. Morgan & Co., the firm serves millions of consumers in the United States and many of the world’s most prominent corporate, institutional and governmental clients. It is also a component of the Dow Jones Industrial Average.
The JP Morgan Chase brand is used by the Investment bank as well as the Asset Management, Private Banking, Private Wealth Management, and Treasury & Securities Services divisions. Fiduciary activity within Private Banking and Private Wealth Management is done under the aegis of JPMorgan Chase Bank, N.A.-the actual trustee.
The Chase brand is used for credit card services in the United States and Canada, the bank’s retail banking activities in the United States, and commercial banking.
JPMorgan Chase’s activities are organized, for management reporting purposes, into six business segments:
- Investment Bank
- Retail Financial Services
- Card Services
- Commercial Banking
- Treasury & Securities Services
- Asset Management
The total revenue of JPMorgan Chase was $100 billion in 2009 with Net Income of $11.7 billion. Net revenue and net income increased in investment banking segment in 2009 amounting to a 228% increase in net revenue to $28,109 million and a net income of $6,899 million over a $1,175 loss in the previous year. credit card services accounted for 18.7% of 2009 net revenue.
In March of 2008, JPMorgan announced its intention to acquire troubled investment bank Bear Stearns Companies (BSC) for $2.32 per share, significantly less than its closing price of around $30 on the previous trading day. This sent Bear Stearns shareholders into an uproar, which eventually led JP Morgan to raise its offer to about $10 per share, more than four times the original bid. The takeover was approved by shareholders on May 29, 2008. JP Morgan hopes to take advantage of Bear’s name and customer relationships to augment its existing investment banking operations. Bear’s private equity unit will be spun off, however, as an independent company. JP Morgan will retain a $1 billion stake in Bear Stearns Merchant Banking, which manages about $5 billion.
JP Morgan also acquired Washington Mutual on September 25, 2008 for $1.9B. This purchase includes $307B in assets and $188B in deposits JP Morgan will have to work to integrate the two companies together – WaMu is the largest bank, in terms of assets, in history to fail. JP Morgan announced that it plans to lay off 9,500 employees, nearly 1/4th during the transition process. JP Morgan is also at much higher risk because the $307B assets are troubled, and could negatively affect JP Morgan and its balance sheet.