How JPMC Became The Biggest in the World

JP Morgan’s market cap is more than $450 billion right now. It has grown roughly 10x in the last 20 years, and much of that can be contributed to the strategies implemented by long-time CEO, Jamie Dimon.

He’s the only CEO of a large bank who has stood the test of time and has not been replaced in the last 18 years. And he has replayed the shareholders’ trust in him by performing at the highest level and improving the performance of the bank.

Dimon says that you should have a “fortress balance sheet”, meaning you should have an array of good assets in your arsenal, so that if any unforeseen circumstance happens, which happens every few years, your company is placed to be able to wither that storm.

This approach meant that Dimon and his bank came out of the 2008 financial crisis in much better shape than most of their peers. While many financial institutions needed capital to remain functional and some were even forced into bankruptcy, JPMC was in a position where they were actually buying up assets/companies during that time and were even called upon by the government for assistance.

Another thing that Jamie Dimon has seemingly mastered is the art of acquisitions. As I said above, JPMC acquired a few institutions during the 2008 crisis, including Bear Stearns. Even with the debts and lawsuits that came with all of these acquisitions, the bank had created enough business that it became the biggest by deposits in 2011.

You might have heard recently that First Republic Bank in the USA failed. JP Morgan also went and bought most of their assets at a discount. This type of deal creates value for the company very quickly, since they buy assets, from a desperate seller most of the time, for much less than their market value.

But the scale and power of the bank do raise the question, IS IT TOO BIG TO FAIL? Meaning, is the bank so big and is the US economy so dependent on them that their taking outsized risks and failing (a scenario that is very much possible) would mean that the entire US economy would come to a standstill? Maybe it doesn’t happen under Dimon, given his fortress balance sheet approach, but it could happen let’s say 20 years from now when some other guy is in charge and he isn’t as strict and competent, right? Hopefully not, but we’ll see.

Well, that’s it for this article, but you read more from me here. And do let me know if you want a specific topic covered! Subscribe for free to receive more posts like this every day!