Morning Coffee: There’s a new front runner to be JPMorgan CEO. The little bank with the most fantastic perks
Big news from JPMorgan, with a significant reshuffle of the top management that’s being specifically described “an important step in our board’s thoughtful process around succession planning”. Marianne Lake is leaving the bank, so we will not see a second US bulge bracket player being run by a British woman (as well as Jane Fraser’s Citi).
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And both Doug Petno and Troy Rohrbaugh have been promoted to be “co-presidents”, with Petno being given sole charge of the commercial and investment banking division while Rohrbaugh takes over consumer banking from Marianne Lake. This presumably puts these two men in the prime position to succeed Jamie Dimon. But who is the first among co-equals?
Analysts like Ebrahim Poonwalla at Bank of America seem to think that Rohrbaugh seems the more likely choice, and there’s a lot of reasons to agree. He is relatively young at 56, while Petno is 61. And the board memo also referred to the job moves in terms of “development of our top leaders”.
JPMorgan is a genuine universal bank, which requires leadership who understand retail and corporate lending, asset management and technology, as well as investment banking at the highest level. The difficulty in combining all these different business models without favouring one or letting another wither is one of the reasons that Dimon has gone on so long (and possibly why so many past succession candidates have fallen away).
Rohrbaugh is being rotated into a position where he’s going to get an opportunity to demonstrate the ability to lead a completely different business line. Petno is an investment banker with a natural resources specialty who will continue to run the investment bank. It feels like one of these candidates is being groomed for the top while the other is not. (Although JPM CIB can hardly be described as a consolation prize).
Of course, this rotation through the top divisional jobs has happened before – both Marianne Lake and Jennifer Piepszak were given development postings of this kind. And in fact, the only other person to have done the job of JPMorgan CEO in the last twenty years (Dan Pinto, while Jamie was having heart surgery) was an investment banker for his whole career. But nonetheless, it looks like the job is now Rohrbaugh’s to lose.
Which isn’t in any way the same thing as already having won it, of course. Petno is his formal equal, and was given the same $30m retention bonus this week. Mary Erdoes, the head of wealth management, was also given a substantial retention award of $20m, indicating that while she might not be the front runner, she’s probably still being kept in mind. And although Jenn Piepszak has ruled herself out, people do change their minds sometimes, and her performance as Chief Operating Officer seems to have been well regarded.
The race to succeed Jamie Dimon is definitely a marathon rather than a sprint – in fact, it’s more like an endurance run where most of the field don’t finish. But it feels like it may finally be entering the home straight.
Elsewhere, while other bankers squabble over whether they’re allowed to time client visits to coincide with World Cup matches, or play political games with the corporate seats at Wimbledon, Investec is putting its staff on a private jet painted to look like a zebra and sending them off to watch “snow polo” in St Moritz.
Obviously there will be wealth management clients there too – the British/South African bank is adopting a creative strategy to try and bring in ultra-high net worth individuals by offering them perks that they might not even have thought of. But the nature of private banking is that you are always blurring your business and social life, so that might be an added plus rather than an inconvenience.
This also looks like a potential source of sustainable competitive advantage. It’s hard for incumbent banks to compete with more agile fintech startups when it comes to AI and product design. But it’s hard for fintech bankers to look really convincing with a glass of champagne in their hand at a “build your own watch” event. Perhaps Revolut, which wants to get into wealth management, will start sponsoring horse sports. And perhaps banking will start getting a bit more fun after all.
Meanwhile…
Former Deutsche Bank CFO James von Moltke is going to “take some time to decompress” when he leaves Deutsche completely at the end of this month. Then he’s going to start looking for something else, with the ambition of being a CEO. (WSJ)
Congratulations to 43% of those who took the CFA Level 2 exams in May. The pass rate is up on November but down on last year and below average. This might partly be because deal flow has been strong, and it’s well known that people who postpone their exams because of pressure of work tend to do worse. (Bloomberg)
Vasudha Saxena of JP Morgan’s $1.5 trillion “Security and Resiliency Initiative” says that if you think normal deals are difficult, try public-private partnership deals with multiple players, many of whom have national security and defence connections. (Business Insider)
Algorithmic market making used to be just a matter of having a good set of algorithms and very low latency. Now clients are getting much more demanding and fifty per cent of the business is customisation and service. (Traders Magazine)
Antonio Puno is moving internally in Bank of America, to join the financial sponsors team in London. Dominic Tan will replace him as head of investment banking in Southeast Asia. (Bloomberg)
The investment banker with an unfinished novel in his or her desk drawer is something of a cliché – the industry has probably saved the public from huge amounts of mediocre fiction over the years. But Chetan Bhagat of Goldman Sachs’ Hong Kong office managed to complete his, and it was very good – it inspired one of the most successful films in the history of Bollywood. (Economic Times)
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