"S, Tom Brady, Stephen Curry." When it comes to making sure the world's biggest bank is a lean operation, Jamie Dimon takes athletic inspiration. "Look how they train, what they do to be that good," says the boss of JPMorgan Chase. "Very often, senior leadership teams, they lose that. Companies become very inward-looking, dominated by staff, which is a form of bureaucracy."
During Mr Dimon's tenure, JPMorgan has become to banking what Ms Williams was to tennis. In most of the markets in which it competes, it ranks as America's leading institution, or a close runner-up. It boasts a market capitalisation of $730bn, or 30% of the total among America's big banks, up from 12% when Mr Dimon took charge at the start of 2006 (see chart 1). The gap with competitors has grown larger still since the covid-19 pandemic. JPMorgan has 317,233 staff, nearly twice as many as in 2005. Its share of American deposits has doubled to 12%.
America has never had a bank of such size. Even when John Pierpont Morgan, one of Mr Dimon's predecessors, bailed out the Treasury at the turn of the 20th century, he could not boast coast-to-coast operations. In 2021 JPMorgan became the first lender with branches in every one of America's 48 contiguous states. The bank's combination of scale and market-beating efficiency means that it can invest far more than its rivals in technology, draw on an immense hoard of deposits for cheap and sticky funding, and benefit from flights to safety when smaller banks wobble.
But the institution's tremendous size, success and prominence poses risks, too. Banking is not a business that suffers mistakes gladly; the larger and more unwieldy an institution, the longer the list of potential slip-ups. Being the biggest bank in a country where small lenders are sacred makes JPMorgan an obvious political target, from both the left and right. And then there is the succession question. How do you replace a man of Mr Dimon's reputation? And how does someone without his stature prevent infighting and bureaucracy at an institution of JPMorgan's size?
Mr Dimon sat down for an interview with The Economist on May 16th. We also met the four bosses of the bank's biggest businesses -- the most likely candidates to succeed Mr Dimon -- beforehand. They are Troy Rohrbaugh, co-head of the commercial and investment bank; Douglas Petno, its other boss; Mary Erdoes, who runs the wealth-management arm; and Marianne Lake, leader of retail operations. Each is a loyal lieutenant and JPMorgan veteran. Mr Rohrbaugh is the most recent hire; he has worked at JPMorgan for 20 years.
On January 1st next year, Mr Dimon will have been at the helm of the bank for the same amount of time. On March 13th he will celebrate his 70th birthday. His succession has been a subject of relentless discussion on Wall Street for over a decade, spurred on by two health scares and the prospect that he might be made treasury secretary. Mr Dimon says that in the next few years he will step down but remain the company's chairman, and stubbornly refuses to provide a firmer timeline. He does offer some traits for any future leader of the bank: "There's a work ethic; there's people skills. There's determination. You better have a little bit of grit. There's humility; there's ability to form teams. There's having courage. Constantly observing the world out there and thinking, 'Well, what can be done better?'"
Well, what could be? Not much, if you listen to Mike Mayo of Wells Fargo, the most prominent JPMorgan analyst and an uber-bull. Indeed, Mr Mayo has asked why Jamie Dimon would want to step down at all. The bank is, he says, the "Goliath of Goliaths" and the best he has covered in his career; he expects it to be the first with a trillion-dollar valuation. Part of his argument is that advances in artificial intelligence mean investment in tech has grown in importance, and JPMorgan, which he also calls the "Nvidia of banking", can afford more than any rival. The bank will spend about $18bn on tech this year, some 40% more than Bank of America.
The heft that JPMorgan has developed under Mr Dimon provides the bank with a compounding advantage. Wall Street executives moan about how hard it is to compete across JPMorgan's full range of businesses. The bank has an enormous base of $2.5trn in deposits. Over the past two years it has paid out $190bn in interest on deposits, while hoovering up $374bn in interest on loans (see chart 2). Yet the bank is not just larger than its rivals -- it is also more streamlined. Its efficiency ratio (non-interest expenses as a share of total revenue) has dropped from 61% in 2015 to 51%, a figure that is 15 percentage points lower than any competitor (see chart 3).
Increasingly, JPMorgan's competition is to be found outside banking. "I want us to be better than the best in class, which is in many ways the non-bank trading houses," says Mr Rohrbaugh. "In other parts of our business, like in payments, we're not only competing against the big banks, we're competing against fintechs." Vast trading firms such as Citadel and Jane Street have grown into market-making activities once dominated by banks, while techy upstarts such as Stripe eat into payments.
According to clients, JPMorgan has stayed efficient because its businesses have remained complementary. It has avoided both becoming a conglomerate made up of unrelated silos and falling into zero-sum internal competition. "You have to sew all those pieces together," says Ms Erdoes, who has run wealth management since 2009, meaning she has been in her current job the longest of the four bosses. "That's really easy at our operating-committee level, because we live with each other. It's harder when you've got the person in the Milan office who's trying to find the person in the Austin, Texas office."
Mr Dimon's "fortress" balance-sheet helps. Large reserves, low leverage and plentiful capital serve JPMorgan well in times of stress, allowing it to snap up firms. The bank bought Bear Stearns and Washington Mutual, a pair of banks, as the financial crisis worsened in 2008. Two years ago, during a smaller crisis, it acquired the lion's share of assets from First Republic, America's 14th-largest bank. "We did it because the government needed it," says Mr Dimon. But "we have to make it financially attractive to ourselves, obviously."
The stress in 2023 had lessons for JPMorgan. "When Silicon Valley Bank failed, we learned a lot about what we didn't do properly covering Silicon Valley," says Mr Dimon. "Even though we're out there all the time and we did a lot of stuff. The [lesson of the] deep-dive was that we didn't have a consistent, devoted calling on venture capitalists." That year JPMorgan hired John China, former president of Capital, Silicon Valley Bank's venture-capital arm, to jointly run its "innovation economy" business. His job is to tie America's financial capital to its tech capital.
At the same time as other firms are cutting back in San Francisco, or abandoning the city altogether, JPMorgan last month announced plans to increase the size of its offices in the city by 30%. "When you bank the venture capitalist, you bank them individually, you bank their firm, you bank their startups and you bank their founders," notes Mr Petno. The exercise-obsessed, joke-cracking Mr Petno is a veteran even among the veterans, having worked at JPMorgan for 35 years. The firm's analysts think that his promotion, in January, to jointly run the investment bank puts him in serious contention for the top job.
Meanwhile, the bank's retail operations are spreading across the country. Ms Lake, their boss, who grew up in Britain and speaks with a crisp English accent, wants a 15% share of American deposits, a cautious goal. Over the past six years, JPMorgan has established a physical presence in 25 states. It takes several years for branches to reach their potential, and in dozens of cities -- Boston, Salt Lake City and Washington included -- the bank still oversees less than 3% of deposits. JPMorgan is growing overseas, too. Almost four years after launching a digital consumer bank in Britain, it has 2m customers. Germany is next. "We have previously said Europe is more difficult, but that is different today with digital banking," explains Ms Lake.
Could anything halt JPMorgan's ascent? Scale is no guarantee of success. At the turn of the century, another institution accounted for 30% or so of the market capitalisation of American banks. After a barrage of mergers and acquisitions, Citigroup was a titan. But its lead was eroded by a series of scandals in the 2000s, and a bad financial crisis. Today it accounts for less than 6% of the industry's market capitalisation. By comparison, JPMorgan has been pretty scandal-free under Mr Dimon -- with the exception of the "London Whale" farrago, when a rogue trader cost the institution over $6bn.
JPMorgan's size also makes it a target. In normal circumstances, American law would not allow it to merge with another lender, owing to its market share. But the rule does not apply if the lender is failing, which is what allowed it to buy First Republic. All the same, JPMorgan was criticised. Elizabeth Warren, a left-wing senator, paired up with J.D. Vance, now vice-president, to attack the sale. It made "the nation's largest bank grow even bigger".
Mr Dimon is unrepentant, arguing large banks offer America vital heft. "We move $10trn a day...We have lent $35bn to a company to get a deal done. You know, we bank the biggest companies around, we bank countries," he says. "I don't think necessarily the people making those statements understand why you need a big bank that does business in 100 countries and that market-makes like we do."
A world of trade wars and geopolitical strife is difficult for any globetrotting firm. JPMorgan and Bank of America were recently criticised by members of Congress for underwriting a sale of shares by on May 20th. The firm is a Chinese battery manufacturer. Its products are found in electric cars everywhere, but it is also blacklisted by the Pentagon for links to China's armed forces. Mr Dimon notes that does not face American sanctions. And he still believes in commercial engagement: "It is not my thing to say we are not going to engage with China anymore...I do not think the Chinese or the Americans want us to leave. I do not think the American economy wants to leave. But we are going to have these issues at the margin...It's going to be harder."
The last, and toughest, challenge is succession. During Mr Dimon's time as chief executive, more than a dozen supposed candidates have been and gone. Indeed, he has been in the post for so long that some have had several jobs since. Bill Winters, the boss of Standard Chartered, and formerly of JPMorgan's investment bank, aspired to take Mr Dimon's throne. Now he may retire before Mr Dimon. In 2020 The Economist wrote that no one, even Mr Dimon, thought that he would remain in his role for another decade. That was five years ago, and Mr Dimon says he will remain for a few more. We would no longer bet against him going the distance.
When probed on how they might run the bank, internal candidates predictably do not step out of line: all are, it turns out, focused on their jobs, work closely with one another and do not dream of being the next boss. Each faces a fearsome job interview when the time comes. And could the bank try to recruit from elsewhere?
Whoever triumphs will lack their predecessor's stature. No matter their experience, they will not have built a megabank. Few people are recognisable by their first name on both Wall Street and Capitol Hill. In a sign of his influence, Jamie was even credited with softening President Donald Trump's tariffs. It was not hearsay. Mr Trump himself said that he changed his mind after watching an interview with Mr Dimon on Fox News, during which JPMorgan's boss had said a recession was likely because of the wave of protectionism. "He's a genius financially, he's done a fantastic job at the bank," the president gushed. Today's all-conquering JPMorgan has been built in Mr Dimon's image.
Mr Dimon recalls the advice that he gave to Charlie Scharf, formerly head of JPMorgan's retail bank, when he left the firm to run Visa, a payments giant. Two things change when an executive moves into a top job, explains Mr Dimon. "The first one is there is nobody to complain to." Second, a chief executive can no longer rely on a backstop from a higher power. "There is no tacit approval. It is your decision. It's just different. Heavy is the head that wears the crown." And no Wall Street crown is heavier than JPMorgan's. ■
