JP Morgan and Citigroup sent out internal memos this morning to assure employees that everything is fine. As we’ve learned over the last few months, of course, the time-horizon covered by that assertion is “this morning.”
But it’s a way for both banks to hang on to their business a few minutes longer, as clients quiver in fear and a humongous competitor looms in the form of BofA/Merrill.
WSJ on JP Morgan memo: “Our primary objective is to assure clients that J.P. Morgan is still operating from a position of strength, that we are here to help them and that recent events should not prompt them to take actions that may not be in their best interests longer,” according to an internal memo sent by investment bank co-heads Steve Black and Bill Winters shortly after midnight.
The memo, reviewed by The Wall Street Journal, said J.P. Morgan was establishing new “rules of the road” regarding risk and trading decisions. The bank set up a “risk management command centre” led by John Hogan, chief risk officer of the investment bank, and Brian Sankey, who is Mr. Hogan’s deputy and global head of credit risk. Further details weren’t available.
The investment bank chiefs also nudged bankers to respond quickly to clients–and each other.
“We all should err on the side of over communicating over the next several weeks, and we ask that you return calls from your colleagues as quickly as possible to facilitate decision making,” the memo said.
Citigroup also tried to keep their employees calm and clients sticking with the firm.
WSJ: Citigroup, like rival J.P. Morgan Chase, did its best today to keep its employees from fretting about a new, larger Bank of America by urging them to “maintain our unrelenting focus on the needs and concerns of our clients and shareholders.”
In a memo signed by CEO Vikram Pandit, the bank urged its staffers to comfort clients not just about Citigroup, but also about the entire industry:
[Clients and shareholders] will want our views on the ongoing market dislocation. Please assure them of the entire industry’s commitment to work together through this transition. We are confident about the future despite a very challenging time. Indeed, an enduring hallmark of Citi is its ability to support clients during the tough times, and we are confident we will live up to that legacy in the days, weeks, and years ahead.
Pandit sent staffers to listen to an internal voice recording from Jamie Forese and finance chief Gary Crittenden about Citigroup’s role in the capital markets. “You will take away from that call at least one thing: over the last year, Citi has managed critical priorities well–our capital and liquidity positions are strong, and we have tremendous capacity to make commitments to our clients,” Pandit wrote.
He also gave employees a list of talking points to share with clients:
- Some nine months ago, we acted quickly to strengthen Citi’s balance sheet and established a very strong capital base for Citi’s present and future. We raised $50 billion in the capital markets since November.
- As of the 2nd quarter 2008 earnings release, our Tier 1 capital ratio stood at 8.7%, which is well in excess of the “well-capitalised” regulatory minimums. With continued deleveraging through the sale of our German retail franchise, which closes in the 4th quarter, we expect to add another 0.6 percentage point to our Tier 1 ratio.
- Our financial strength makes us a favoured counterparty.
- Our balance sheet was in excess of $2 trillion and our Stockholders’ Equity at the end of the second quarter stood at $136.6 billion. The company’s cash position is very strong.
- Citigroup continues to boast a strong deposit base that is diversified across products and regions. This diversification, including deep access to international deposits, provides us with an important stable and low-cost source of funding.
Pandit’s sign-off? “I would like to thank all of you for your hard work and dedication. Citi never sleeps.”
Never one to miss a branding opportunity.
Business Insider Emails & Alerts
Site highlights each day to your inbox.