US banking giant JP Morgan Chase & Co (NYSE:JPM) has announced a program that will see several thousand jobs cut and a reduction in the number of businesses it owns. Over the next year, the New York based bank will seek to reduce expenses and selloff businesses related to the mortgage market. This move is in line with a similar program from last year, when the bank cut 7,900 mortgage jobs and exited several businesses. The cuts are largely seen as a response to the waning demand mortgages in the US.
JP Morgan, America’s and the world’s largest bank by assets, is seeking to automate part of its business and remove the need for human labour. A report in February detailed plans to reduce the number of tellers the bank employs and instead replace them with new automation technology. The layoffs will be spread across all four of the bank’s major business divisions: corporate and investment banking, consumer and communication banking, asset management, and community banking. The bank will also cut jobs in its legal and compliance departments that swelled in size during and after the global financial crisis.
Contrary to popular belief, Commercial Bank of China is not the largest bank in the world by total assets. Because of a difference in accounting practices, assets owned by US banks are accounted for in a different manner. US and Japanese banks use an accounting practice known as Generally Accepted Accounting Principles (GAAP). Chinese and European banks use International Financial Reporting Standards (IFRS). Under IFRS, banks report derivative assets as a gross total amount, whereas GAAP standards say derivative assets must be reported as a net amount. When applying IFRS to American banks, JP Morgan’s assets swell to around US$3.70 trillion, making it the largest bank in the world and beating Commercial Bank of China by about US$650bn.
Author: Matthew Dibb
May 29, 2015
Matthew has an extensive track record in equity markets and derivative advisory. Spanning a career in several investment banks and prviate wealth groups including Macquarie Bank, his specialist knowledge relates to capital market advisory and equity market analytics. Matthew has a diploma in Financial Advisory, Applied Finance and is ADA 1 & 2 accredited.