J.P. Morgan Chase & Co. has begun layoffs that are
expected to total more than 5,000 by next year. This latest phase of cuts
started earlier this year and would eliminate at least 2% of the bank’s
workforce over the next year. The moves come as the nation’s largest bank
overhauls its 5,570 branches to rely more on technology and less on human
tellers. Chairman and Chief Executive James Dimon said Wednesday that
the average J.P. Morgan Chase branch would lose one employee over the next two
years, mostly through attrition.
The layoffs on the other hand are more broad-based,
affecting all four of the bank’s major business units: corporate and investment
banking, consumer and community banking, asset management and commercial
banking. Some employees in the “controls” part of the bank, such as those in
legal or compliance, will also be affected as the bank trims departments that
have grown dramatically over the past few years, people familiar with the
matter said.
J.P. Morgan hasn’t detailed the layoffs previously, but did broadly
discuss expense cuts in a February presentation to investors. At least
1,000 of the 5,000 layoffs have already been carried out in the past few
months, but more are expected as the bank continues to slim expenses in an
effort to meet profitability goals, one of the people added.
The layoffs won’t necessarily mean that overall head count
at the bank will continue to fall. J.P. Morgan hires around 40,000 employees
each year to fill open positions and add its post-college class of analysts,
the person said. And the expected layoffs aren’t anticipated to be as high as
last year’s when the bank cut 7,900 mortgage jobs and exited several
businesses.
The latest job cuts show that despite some resiliency in
certain business lines, including merger advisory and asset management, J.P.
Morgan remains focused on cutting excess costs. J.P. Morgan has trimmed its
total head count in 11 of the past 12 quarters, to 241,145 employees, down
about 20,000, or 7.7% from the peak.
Under Mr. Dimon, business heads are leading the charge
for each of their units. They began after the bank doled out bonuses in
February and will be completed at different times depending on the function,
these people said. That is in conjunction with the bank’s annual budgeting process,
which is reviewed with the bank’s board in January.
This year’s focus follows the bank’s efforts last year on cost-cutting,
including relocating employees to less expensive office space and revising
third-party contracts. The push was expected to shave off hundreds of millions
of dollars in annual savings, though the exact amount hasn’t been disclosed.
The employees laid off, or in consideration, range in
seniority, from junior analysts up to managing directors who can often earn
six-or-seven figure annual pay packages, people familiar with the bank said.
Some employees are also being reassigned to other areas of the bank, some of
these people said, though as the bank exits certain regions, it is harder to
redeploy those employees who don’t want to move.
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