Much as the 2008 financial crisis created an opening for JPMorgan Chase, the largest U.S. bank again senses an opportunity to gain market share across various business lines amid the industry's latest upheaval.
It sees a chance to bulk up in the venture capital segment after the collapse of tech-heavy Silicon Valley Bank. It plans to
And at JPMorgan's annual investor day on Monday, executives signaled that they don't have the same kind of concerns about deposit outflows that many smaller banks have been facing.
"We've had clients whose boards and CEOs have sort of said, 'Hey, where are our deposits?' And oftentimes the question sort of dies when the answer is, 'They're at JPMorgan Chase,'" said Doug Petno, the bank's CEO of commercial banking.
The opportunities borne by the regional banking crisis were a major theme of JPMorgan's presentations to investors. That narrative contributed to an existing perception among market participants that JPMorgan's heavy investment spending will pay off by fueling more growth.
The bank's presentations on Monday reinforced the theme that "Goliath is winning," analysts at Wells Fargo Securities wrote in a research note. Looking forward, they estimated that JPMorgan will be responsible for 25% of the banking industry's total spending on technology and marketing.
JPMorgan's heavyweight investments may be well timed, argued the Wells Fargo Securities analysts, given weakness among regional banks in the United States and the recent collapse of Credit Suisse in Europe.
Last year, JPMorgan reported adjusted expenses of $76 billion. Before the First Republic acquisition, the New York-based bank was anticipating that total would rise to $81 billion in 2023.
Now, as a result of the First Republic deal, adjusted expenses are expected to climb to $84.5 billion. And that number doesn't include another $3 billion pretax expense that JPMorgan expects to accrue this year as a result of an anticipated special assessment by the Federal Deposit Insurance Corp., which is seeking to rebuild its reserves after a rash of bank failures.
JPMorgan has been touting its expanded opportunity in wealth management since May 1, when
The $3.7 trillion-asset bank provided some new details on Monday. Executives said that First Republic's office locations in cities such as San Francisco, New York and Boston cover 50% of JPMorgan's wealth management balances, and they noted that those branches will continue to
"We plan to leverage this real estate along with First Republic's unique branch format and operating model to better serve our affluent clients," said Jennifer Piepszak, co-CEO of consumer and community banking at JPMorgan.
JPMorgan is also eyeing opportunities opened by the demise of SVB. One area of focus is holding on to new corporate clients that moved their money to JPMorgan amid the recent turmoil.
"Those companies were desperate to move their money, and being at JPMorgan is a relief to them," Petno said. "The large majority we expect will be our clients for a long time."
In particular, JPMorgan has seen a large influx of innovation economy companies since March, Petno said.
"Looking forward, we have a real opportunity to support this sector and fill a real market need," he added. "And to do that, we are going to accelerate our growth strategy and step up our investment, significantly expanding our support teams and bankers focused on startup banking, venture capital coverage, risk and early-stage lending."
Mary Callahan Erdoes, the bank's CEO of asset and wealth management, said that with each banking crisis, JPMorgan tends to gain market share.
"We become the flight-to-quality beneficiary. We get institutionally smarter with each one of these, and we know what to do," she said.
Within its wealth management unit, JPMorgan opened 40,000 new accounts between March 10 and May 19, according to Callahan Erdoes. She attributed the outsize growth to the recent industry turbulence.
"Just on the institutional side, we did two years' worth of account opening in basically two months," she said.
