International Financing Review March 7 2020 15

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Dimon scare restarts succession talk

JP Morgan CEO has emergency surgery; Pinto, Smith take charge

JP MORGAN CEO Jamie Dimon was

hospitalised on Thursday for emergency

heart surgery after suffering a tear in his

aorta.

While the long serving bank chief

recuperates, the board has tapped co-

presidents Daniel Pinto and Gordon Smith

to run the bank.

JP Morgan said Dimon is alert and

recovering well.

An aortic dissection is a serious

condition in which there is a tear in the

wall of the major artery carrying blood

out of the heart. Dimon checked himself

into the hospital after experiencing chest

pains.

While Dimon is expected to return, the

health scare has renewed interest in JP

Morgan’s CEO succession planning.

Dimon has been CEO since the start of

2006 and chairman since the start of

2007, and is widely regarded as the

leading banker of his generation,

relentlessly making JP Morgan the

number one bank in most areas,

including investment banking.

But with that comes “key man risk”.

At the bank’s most recent investor day

conference just three weeks ago the

succession issue was not broached.

Analysts previously made an annual

obsession of asking the 63 year-old CEO

about his retirement plans – which have

generally garnered the same response

FROMû$IMONûINûRECENTûYEARSûhABOUTûlVEû

years more”.

“HAND-IN HAND”

“We have been working hand-in-hand

with Jamie and the board over the past

two years to help lead our company,”

Pinto and Smith said in an internal memo

to employees, seen by IFR. “We have also

been deeply involved in all of the critical

lRM

WIDEûFUNCTIONSv

Pinto is CEO of the corporate and

investment bank. Smith is CEO of

consumer and community banking.

While Pinto and Smith have taken the

helm immediately, there is still a long line

of capable executives in the queue if

Dimon opts to take a well-deserved rest

after helming the biggest bank in the US

for more than 14 years.

Most analysts have become comfortable

with the bank’s deep bench of executive

talent.

“There’s precedent for JP Morgan

operating smoothly during the CEO’s

absence, such as for several months in

2014 when he underwent cancer

treatment,” said Wells Fargo bank analyst

Mike Mayo.

Mayo said investor concern will

understandably focus on the timing of

Dimon’s return, “especially since he has

been the most successful big bank CEO in

the past two decades”.

But Mayo said the bank is in good

hands, as Pinto and Smith have already

been responsible for running day-to day

operations since taking co-chief operating

posts in 2018.

Other analysts agreed.

“The bottom line is that Mr Dimon is

often viewed as a steady hand for the

banking industry during turbulent times,

so not having him at the helm of JP

Morgan is a modest negative,” said KBW

analyst Brian Kleinhanzl.

“That said, both Pinto and Smith have

deep experience at JP Morgan and have

run JP Morgan’s largest segments.”

The other two top candidates are

WOMENûFORMERûCHIEFûlNANCIALûOFlCERûANDû

current CEO of consumer lending

Marianne Lake; and Mary Callahan

Erdoes, CEO of asset and wealth

management.

Doug Petno, CEO of commercial

banking, is also in the mix as the possible

next CEO.

Dimon’s sudden absence presents JP

Morgan’s top managers with something

of a stress test. They will be forced to go

without their key leader as the bank tests

contingency planning in the face of the

spread of the coronavirus, and as the US

Federal Reserve prepares to administer its

annual Dodd-Frank mandated stress test.

Philip Scipio

19

HSBC’s Allegra

Berman

will be in charge of

institutional sales in a

new unit that merges

securities services with

global markets

16

The US Fed

is aiming to

simplify capital rules

with a new “stress

capital buffer” - which

is expected to raise

requirements for big

banks

22

Argentina

picks Lazard

as financial adviser

and Bank of America

and HSBC as

placement agents for

its upcoming debt

restructuring

Dimon is widely regarded as the

leading banker of his generation,

relentlessly making JP Morgan

the number one bank, including

in investment banking

Source: Eikon data

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Dimon becomes CEO

DIMON HAS BEEN JP MORGAN CEO

SINCE THE START OF 2006

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