J.P. Morgan Chase & Co. has begun layoffs that are expected
to total more than 5,000 by next year, people familiar with the
matter said.
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.
Other large U.S. banks are also tightening their belts. J.P.
Morgan's decline from the peak employment compares with a decline
of about 20% at Bank of America Corp. and a decrease of 9.1% at
Citigroup Inc. over the same period, according to securities
filings.
Banks have been scrambling to cut costs enough to counteract
increased regulatory and legal expenses in recent years while
revenue growth has been hurt by low interest rates. J.P. Morgan is
also looking to more sophisticated technologies to automate work,
such as new ATMs or faster trading capabilities. At his Wednesday
presentation, Mr. Dimon said the average branch could lose two
tellers and add one financial adviser as the business of handling
deposits grows more electronic.
"It's cheaper for us and good for clients," Mr. Dimon noted.
Under Mr. Dimon, business heads including Daniel Pinto, Gordon
Smith, Mary Callahan Erdoes and Doug Petno are leading the charge
for each of their units, alongside Chief Operating Officer Matt
Zames and Chief Financial Officer Marianne Lake, people familiar
with the matter said. 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, Ms. Lake said in an interview.
Some teams within the bank have been tasked with laying off 2%
to 5% of their employees, these people said.
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 bank said at its presentation in February that it expects
expenses to drop to about $57 billion in 2015, from $58.4 billion
in 2014.
"We won't compromise investment dollars in order to improve
short-term efficiency or performance," Ms. Lake said, adding that
keeping strong controls is also a priority.
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.
There is also a big focus on costs in the corporate and
investment bank, with layoffs expected around technology and
operations employees, the people said.
Write to Emily Glazer at emily.glazer@wsj.com
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