JP Morgan hopes merging divisions will pay dividends

With many financial institutions coming under pressure to restructure their businesses in the wake of the last few years of economic turmoil, some firms have looked to separate aspects of their business in order to isolate the potential risks.

JP Morgan, however, have announced plans to merge their corporate and investment banking divisions with their securities and treasuries arms, in the hope that it will lead to increased pre-tax profits of $1bn over the course of the next five years.

In an interview with the Financial Times on Monday, group CEO, Jamie Dimon, said this streamlining of the business will help reduce costs while tightening the integration of services offered. He said: “This is forward thinking at a time when many of our competitors are pulling back.”

The firm, which last year reported $10.4bn of pre-tax profits, also aims to integrate electronic trading into the business, while looking to wrestle clients away from struggling rivals by offering a broader range of services.

Co-CEO Daniel Pinto told the FT: “You need size, you need scale, because you need to have a solid funding base to commit large amounts of capital for clients.”

Pinto joins two other executives, Matt Zames and Michael Cavanagh, in heading up the newly restructured business, with their new roles seen as a trial for the eventual replacement of chief executive Dimon when he retires.