JPMorgan’s Private Bank Rocked by Layoffs
The ax began falling with force this week at JP Morgan Chase, with around 100 private bankers and staffers shown the door Monday, according to several sources at the firm.
The cuts largely affected underperformers but are viewed as harbingers of a more radical “restructuring” at the high-net-worth unit of the giant bank. A higher-than-usual number of senior bankers have already left voluntarily this year, they said.
The layoffs were announced internally at regional meetings. Around 15 people were let go in the Chicago area, for example, and half a dozen in the Palm Beach, Florida.
“Underperforming bankers are being unceremoniously walked to the elevator all around the country today,” said a source in an email to k-tcc on Monday. “No warning was provided.”
A spokeswoman for the firm declined to verify the reports or comment about numbers or locations. A source estimated there are around 6,000 bankers and staff in the private banking division.
The layoffs coincide with a bank-wide restructuring as JP Morgan and other major bank companies look to cut expenses at a time when capital requirements and new rules limiting trading and proprietary activities cut into their profit.
Within the private bank, JP Morgan has already decided to move upscale in terms of clients.
Minimum account requirements will be doubled to $10 million from $5 million early next year. Taking a leaf from major brokerage firms such as Merrill Lynch, lower-asset clients will be serviced by a division of the bank where they are assigned a single banker rather than the team of specialists that service well-heeled private banking clients.
“A lot of layoffs today,” a second source wrote us on Monday. “The next round will be for more-connected folks who will be given an opportunity to look for internal mobility.”
Some insiders said the changes being made are sensible, even if morale is temporarily affected.
“We’re undergoing much-needed change, driving upstream,” a managing director in the southwest wrote us. “Only the strong and deserving will survive.”A private bank has more control over client accounts than do broker-dealers, given them a stronger hand over advisors as well.
“Frankly, we own the producers,” wrote the manager, who asked for anonymity because he was not authorized to speak for the bank. ”I own the people in my office….They are tied to their salary and can’t leave. Our model is sustainable and that’s just the way it is.”