Jamie Dimon has been heralded a the king of Wall Street. And everyone from investors in JP Morgan Chase to its employees, creditors and customers seems to share the same sentiment: “Long live the King!”
But Dimon will not run JP Morgan forever. And today he revealed that he is already developing an exit strategy. He appointed Jes Staley, the current head of JP Morgan’s asset management unit, to become head of the investment banking unit. That’s being read as putting Staley in direct line of succession to run the bank after Dimon.
“The timing was right to begin the succession process,” Dimon said in a statement.
Eat At Dimon’s?
While he is only 53 years old, Dimon does not want to run the bank until his grave. In fact, some close to him have said that Dimon’s exit might come sooner than expected by outsiders. He’s a very wealthy man who currently enjoys perhaps the best reputation of any CEO in America. There have been rumours that Obama might want to tap Dimon to run the Treasury Department. His wife told Duff McDonald, author of “Last Man Standing,” that Dimon fantasizes about opening his own restaurant and turning himself into Sam Malone of Cheers.
Dimon won’t say exactly what he plans to do. But he has said there are two things he won’t do: leave to run another big company or retire to just play golf.
Keeping Hope Alive For The Next Generation
Staley is the same age as Dimon and has been with JP Morgan since 1979. He’s worked in a wide variety of divisions of the bank. He headed equity capital markets and and private banking before landing in the asset management operation.
Here’s why Staley’s age matters. If a younger executive had been appointed, JP Morgan may have lost some of its leading junior executives who would have felt that their hopes to run the bank were dashed. Appointing another man Dimon’s age keeps open the possibility of becoming CEO for the likes of Chief Financial Officer Michael Cavanagh and Mary Callahan Erdoes, 42, the chief executive of JPMorgan’s private bank who succeeds Staley as head of asset management.
Staley was the primary driver of JP Morgan’s acquisition of the hedge fund Highbridge Capital. He reportedly convinced a sceptical Dimon to go ahead with the acquisition. Following the acquisition, Highbridge grew from managing $7 billion to managing $21 billion.
Staley will probably keep JP Morgan out of the brokerage business. According to McDonald’s “Last Man Standing,” Dimon was reportedly interested in acquiring a brokerage to bolster the bank’s equity unit. Staley feared this would conflict with the business of the private bank and opposed any such acquisition.
Exit Stage Left: Two Long Time JPM Vets
Currently, the investment banking unit is run by two co-CEO’s, Bill Winters and Steve Black. Both were JP Morgan veterans dating back to before the merger with Chase. Winters, who for many years was focused primarily on the company’s credit and trading businesses out of the London office, is leaving JP Morgan and Black, who oversaw investment banking out of New York, is becoming executive chairman of investment banking to oversee the transition until the end of 2010.
There’s no way around it: Winters, who is 47, and Black, who is 57, are being passed over as possible successors. Winters, at least, had previously expressed an interest in becoming CEO, the WSJ reports.
Both Winters and Black were deeply involved in the acquisition of Bear Stearns. Winters had been saying for years that JP Morgan would never acquire another investment bank, saying a merger would be the equivalent of putting 1 and 1 together and getting 1.2. He now defends the acquisition, saying it was a unique opportunity and the price was right.