The $1 Billion Ouch for JPM
Just how much will all the new regulations and capital requirements cost banks?
Well, at least in one case, $1 billion for JPMorgan Chase.
According to the Wall Street Journal, Jamie Dimon, JPM CEO, told Wall Street investors (see his presentation here) that derivatives regulation in Dodd-Frank will cost the bank about $1 billion annually in lost revenue. Dimon also said, in total, JPM may have perhaps $6 billion of additional capital requirements. The CARD Act, meanwhile, will cost JPM about $750 million in lost income and corporate income will drop $300 million, Dimon said.
Dimon made some other points worth mentioning:
Mr. Dimon, speaking at Barclays Capital’s financial-services conference in New York, said his bank “will
be fine” even after implementing stricter capital and liquidity requirements from the Basel Committee on Banking Supervision.The CEO also said the capital-markets trading business so far this quarter “has been stable for us” and similar to the second quarter’s. He said third-quarter mortgage losses are likely flat from second-quarter losses. Overall, “credit is in very, very good shape,” he said.He reiterated that the Volcker rule in the Dodd-Frank act won’t limit J.P. Morgan’s ability to do business with customers. But the bank will be moving its commodities and credit-default-swap businesses to a separate subsidiary, which he called an organizational “nightmare.”
JPM had $108 billion of Tier 1 capital at the end of the second quarter and $888 billion of deposits.
In other words, don’t feel sorry for the folks at 299 Park Avenue. Consider this: the bank is on track to hire 10,000 in the US alone. I wonder what JPM serves in the employee cafeteria …
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