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JPMorgan's Dimon warns Russia could lose $1 billion

JPMorgan’s Dimon warns Russia could lose $1 billion

  • Dimon concerned about secondary impact of Ukraine conflict
  • Damon calls for increased US military presence in Europe
  • Dimon urges revamping of US supply chain
  • Fed rate hike may be higher than market expects – Dimon

NEW YORK, April 4 (Reuters) – JP Morgan (JPM.N) The bank could lose about $1 billion from its exposure to Russia, CEO Jamie Dimon said Monday, outlining the bank’s potential losses from the conflict in Ukraine for the first time.

In his closely watched annual letter to shareholders, the chairman and CEO of the largest US bank by assets urged the United States to increase its military presence in Europe and reiterated its call for it to develop a plan to ensure energy security for itself and its allies.

Dimon did not provide a time frame for potential JPMorgan losses in Russia but said the bank was concerned about the secondary impact of Russia’s invasion of Ukraine on companies and countries. Russia describes its actions as a “special operation.”

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Global banks have disclosed their exposure to Russia in recent weeks, but Dimon is the most senior global business leader yet to comment on the broader impact of the conflict.

“America must be prepared for the possibility of a protracted war in Ukraine with unexpected results. We must prepare for the worst and hope for the best,” he wrote. (For five key points from Dimon’s message, click Read More)

The bank said Monday that Dimon may continue as chairman when he eventually relinquishes his role as CEO.

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The disclosure, in a report to shareholders ahead of JPMorgan’s annual meeting in May, said the bank had found that most major shareholders wanted Damon to remain as chairman.

The board also said that it is “as a matter of policy” that it is inclined to separate the chairman and CEO roles after Damon’s departure. She said many shareholders have a general preference for job separation.

Damon has made a joke of constantly saying that he will resign in five years. In 2019, he said the five-year clock had already begun.

In his letter to shareholders, Dimon touched on the relationship between the United States and China and said the United States should revamp its supply chain to limit its scope to suppliers within the United States or to include only “completely friendly allies.” He urged the United States to join the Trans-Pacific Partnership (TPP), one of the world’s largest multinational trade deals.

Commenting on the macroeconomic environment, Dimon said the number of Fed rate hikes “could be much higher than the market expects.” He also provided details of the bank’s rising expenses, due in part to technology investments and acquisition costs.

This letter is Damon’s number 17 as CEO. While Dimon is not the only CEO of a large US bank to write such letters, it has become a must-read among the elite and Wall Street policy makers for the view they give into his political and economic ideas.

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Castle Balance Sheet

This year’s message comes as the Russian-Ukrainian war and high inflation hurt the economy, and at a time when Dimon faces new investor skepticism over expenditures.

Some question its plans to increase spending on the bank’s information technology and campaigns for market share in businesses and geographies where JPMorgan currently tracks competitors, such as Germany and the United Kingdom.

JPMorgan decided earlier this year to hold its first investor day since the pandemic began to address doubts about its spending plans. The meeting will be held on May 23.

Dimon has spent more than a decade building what he calls the bank’s “fortified balance sheet,” and said it’s strong enough now that JPMorgan can take losses of $10 billion or more “and still be in very good shape.”

While Dimon wrote that he was not concerned about the bank’s exposure to Russia, he said the war in Ukraine would slow the global economy and affect geopolitics for decades.

“We face challenges at every turn: a pandemic, unprecedented government action, a robust recovery from a severe and deep global recession, deeply polarized US elections, spiraling inflation, war in Ukraine, and dramatic economic sanctions against Russia,” he said. .

On acquisitions, Dimon said the bank will be reducing share buybacks over the next year to meet the capital increases required by federal rules “and because we’ve made some good acquisitions that we think will strengthen our company’s future.”

JPMorgan has been on a buying spree, spending nearly $5 billion on acquisitions over the past 18 months. That would raise “incremental investment expenditures” by about $700 million this year, Dimon said.

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Dimon said investments in technology will add $2 billion to expenditures this year.

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Additional reporting by David Henry. Editing by Michael Price, Muralikumar Anantharaman and Nick Ziminski

Our criteria: Thomson Reuters Trust Principles.