JPMorgan Chase & Co. is an American multinational investment bank and financial services institution that’s ranked No.1 in the United States and 5th in the world.
Standing today on the base of its 1200 predecessor financial companies and banks, JP Morgan Chase’s history dates back to 1799.
JPMorgan Chase is a vast network of subsidiaries and companies across the globe dealing in all fields of finance, ranging from asset management and investment banking to private banking and financial advisory. JPMorgan Chase’s three primary business segments include:
- Consumer and Community Banking
- Corporate and Investment Banking
- Commercial Banking and Asset Management
JP Morgan Chase's market share and key statistics from 2021
- Net Revenue of $125.3 billion
- Net Income of $48.3 billion
- Assets under management worth $2.5 trillion
- Total assets worth $3.7 trillion globally
- Earnings per share (EPS) of $15.3
- Stock price of $158.4 as of December 2021
- Market Capitalization worth $336.8 billion
- More than 270,000 employees worldwide
- Operations in more than 60 countries
- Global market share of 8% in investment banking
- Market share of 24.7 percent in the US banking industry
- Ranks 24th on Fortune 500
- #1 bank in the world by market cap
- World’s 4th largest public company
Let’s go through the tumultuous history of JPMorgan Chase and find out how it climbed to the top of the banking and financial services industry.
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Humble beginnings: How did JP Morgan Chase start?
The JP Morgan Chase we see today is a product of dozens of mergers and acquisitions in the past two centuries – the major one being of JP Morgan and Chase Manhattan.
The history of Chase goes as far back as 1799, when the third-oldest bank in the US opened, whereas JP Morgan’s history starts in the early 1800s.
Let’s take a look at how one of the biggest banks in the US and the world came into being and evolved over time.
Chase Manhattan Begins As The Bank of Manhattan
Chase Manhattan was founded in 1799 as a water supply company called the Manhattan Company.
The company’s founders actually intended to turn it into a banking company later on. They wanted to challenge the hegemony of the two key banks at that time: the Bank of the United States and the Bank of New York. The Bank of Manhattan opened the same year making it the third-oldest bank in the US.
The founding charter of the bank was quite lax, which enabled the management to loan out to several corporations and individuals, especially in the 1820s.
Soon enough, the bank was expanding exponentially. The massive public construction and need for financing in the early 1800s augmented the bank’s revenues in the financial sector.
How Did J.P Morgan Start?
The roots of Morgan, the second important company in JPM’s history, go back to 1838 when a banker named George Peabody started a banking firm.
Mr. John Junius Morgan became a partner and later took over the firm. His son, Junius Pierpont Morgan renamed the business J.P Morgan and Co. in 1890.
J.P. Morgan played a key role in uplifting several businesses in the US, including AT&T and General Electric, by providing financing.
The bank held immense power in the financial sector, so much so that, in the 1907 crisis, J.P. Morgan was a key partner of the Federal Reserve (FED) in ending the crisis and dealing with the aftershocks.
In the 1929 stock market crash, however, J.P. Morgan, like other banks, was not able to bail out the banking system even after using their own money, and the depression deepened, leaving factories closed, banks failed, regulators furious, and people anxious.
Wiggin’s Business Strategy For Chase National Bank
The Chase National Bank was established in 1877, and it would soon grow and become a force to be reckoned with in the 1900s.
Initially, the bank made slow progress. Only when renowned banker, Henry Wiggins joined as CEO did Chase National start penetrating the banking market and growing exponentially.
He prioritized diversifying the services of the bank. The number of corporate accounts began to skyrocket as the bank started providing trust services, bonds, and stock underwriting. Wiggins also hired directors from top financial institutions across the globe as he firmly believed that the leadership and senior management were crucial to achieving success.
The most remarkable feat of Wiggins was the mergers and acquisitions he was able to pull off. In the 1920s and 30s, six major banks in the US merged with Chase, including the massive Equitable Company, which had more than a billion reserves at that time. By the end of the 50s, Chase had become the largest bank in the world.
However, the era of Wiggins was not all sunshine and roses as he had to resign, and Winthrop Aldrich replaced him. Toward the second World War, Aldrich made several structural changes to breathe new life into the bank after the Wall Street Crash of 1929.
Key Takeaway 1: Start Today And Continue To Make Iterative Improvements In Your Offerings
Lofty ambitions. Grand plans. Unparalleled success. None of them can be achieved overnight. The first and foremost thing every business needs to do is take the leap of faith and just start wherever they are with whatever they have.
Chase Manhattan kicked off its operations as a water supply company. JP Morgan and Co. was set up by a banking executive and continued to reinvent itself. Both of these incredible companies went through a series of trials and tribulations but kept on improving, innovating, and pouncing on opportunities. All of this, in turn, helped them grow and make an impact.
The 20th Century: JP Morgan's acquisition strategy
Both Chase and JP Morgan were making rapid progress and hence, it didn’t come as a surprise that they became rivals in the financial sector.
Post World War II, a major merger took place. Chase reached new heights but started facing issues later on as the US dealt with the Third World Debt crisis.
The Bank of Manhattan merges with the Chase National Bank
In 1955, Chase National and Bank of Manhattan merged, forming one of the biggest banks of that time.
One of the key personnel in the merger was David Rockefeller. He had joined the company as an assistant manager and worked his way up the hierarchy. As the merger concluded, he became vice president. 14 years later, he was named chairman of the newly incorporated Chase Manhattan Corporation.
Under his leadership, the bank continued to expand. As the CEO, Rockefeller quickly rose to prominence as a significant global power broker. He started traveling widely and engaging with influential corporate and political figures all over the world.
Rockefeller used the bank to advance the American foreign policy he believed to be desirable as a result of his prominent international standing. As one of the cornerstones of the American establishment, his sway over the Council of Foreign Relations was quite a lot.
Chase faces an existential threat
For the bank, the 1970s was a challenging decade.
Due to regional banks' decreasing reliance on Chase for their development and growth, as well as the fact that they no longer needed loans from the "banker's banker," it suffered considerable domestic losses.
In addition, Chase incurred large losses in subprime loans to South American nations, which led to the FED listing it as a "problem bank." Despite the fact that throughout this roughly $4 billion period the company's overseas income rose to more than sixty percent of its overall income, the bank struggled to compete with Citibank's explosive growth. Chase still remained the third-largest bank in the nation.
The issue of subprime loans continued in the 80s. As several governments and major corporations defaulted on their loans, Chase incurred heavy losses. The workforce was cut and the stock price plummeted. In fact, the bank reported a loss in 1987, the worst year for the banking industry. Rockefeller retired and picked Willard Butcher as his successor. Butcher left early as the stakeholders decided to tackle the crisis by forming a new team.
How did Chase revamp itself?
The new CEO, Thomas Labrecque, began to shift focus back to domestic operations.
Several operations outside the US and even outside New York were eliminated. The workforce was further cut by 10%. This was opposite to the status of its competitor, Citigroup, which was a global bank.
Labrecque recognized the significance of transforming using innovative technologies. The bank started developing a long-term technological strategy and even invested half a billion dollars to upgrade its information system. It also entered the new arena of online banking and teamed up with prominent tech companies Microsoft and America Online.
Key Takeaway 2: Develop an alternative plan and be ready to adapt fast
Let’s face it: it’s not going to work out according to your plans. The same way it didn’t for J.P Morgan and Chase Manhattan. High domestic losses, being listed as a "problem-bank", and tarnished reputation were just some of the problems faced by Chase. Yet, it not only persevered but thrived as well.
How? By taking a few hard, unpopular decisions such as cutting the workforce, proactively forming new strategies, and ensuring the leadership has the vision to help the company succeed.
Remember that there will be numerous challenges along the way – that’s just how the world of business operates as it takes no prisoners – and so you’ll have to adapt and plan ahead.
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The merging of two big banks and the birth of JP Morgan
As Chase was recovering from a tumultuous period and JP Morgan was slowly expanding, the time was close for the historic merger between the two.
Chase merged with the massive Chemical Banking. Only 5 years later, JP Morgan Chase & Co. was formed and the combined assets and resources enabled the company to begin its journey from good to great.
While Labrecque made efforts to restructure Chase and recover from losses, profit and growth prospects were still not ambitious. The margins were still low, and the stock price had yet to recover.
At last, the much-anticipated merger took place between Chase and the Chemical Banking Corporation in 1995. Considering the size of Chemical, it may even be considered a sort of acquisition rather than a merger. The combined assets were 300 billion, and the bank was now the largest one in the US!
What Was the History of Chemical?
Similar to Chase, the Chemical Bank was initially started as a manufacturing entity. The banking arm was later added to it. Its history dates back to 1844, when it was incorporated as a bank.
It managed to survive the depression of 1857, and by the end of the 19th century, it was one of the largest banks in the country. However, its growth remained stagnant for the next few decades. It was after diversification into other finance fields and overseas expansion that Chemical regained its growth momentum. By the 1950s, it had become the seventh largest bank in the US
Towards the 1990s, Chemical expanded rapidly but had to suffer from similar issues as Chase due to the Third World debt crisis. Chemical merged with the Manufacturers Hanover Corporation, making it the largest merger in US history at the time. The bank was now the fifth-largest in the states.
The merger with Chase in 1995 was a sigh of relief for both entities as they were recovering from the subprime debt issue. The bank was now one of the biggest ones in the country and a leader in several banking areas.
Towards the end of the century, the bank made a few key acquisitions of several investment firms in the US. Chase increased its footprint in investment banking by purchasing Robert Fleming Holdings, setting the stage for a stronger presence not just in Europe but also in the Asian region. But Chase had its sights set on even greater things, soon making the announcement that it was joining forces with JPM.
The Iconic Merger of J.P. Morgan and Chase Manhattan
At the turn of the century, in 2000, J.P. Morgan merged with the Chase Manhattan Corporation, becoming J.P. Morgan Chase & Co. – the global financial powerhouse we know today.
This was long time coming as just a couple of years prior to it, J.P. Morgan made public its intention to merge with another bank in order to augment its offerings and solidify its position as one of the leading financial institutions.
The Chase Manhattan Corporation, with its strong commercial and investment banking, was the perfect match for J.P. Morgan, which was dominant in debt and equity securities underwriting. With assets north of 650 billion, the bank now was only behind Bank of America and Citigroup in size.
Key Takeaway 3: Strategic Acquisitions Can Unlock Exponential Growth
Growth of a business doesn’t have to be linear. It can be exponential – but only if you have the right business strategies in place.
Strategic acquisitions are a proven and time-tested way of boosting business growth. First Chase merged with Chemical Banking and then just a few years later, Chase acquired JP Morgan, becoming J.P. Morgan Chase & Co.
These mergers and acquisitions helped J.P. Morgan Chase gain greater financial strength to be bold and take risks, acquire market share, reduce overheads, and offer a wide variety of quality products and services to its customers.
JP Morgan Chase's growth in the 21st century
JP Morgan Chase’s illustrious history has been well documented – there’s no doubt about it.
But if there was a time period that was most crucial for the company’s success and standing today, it was the two decades from 2000-onwards.
During the sensitive period post the dot-com bubble, the global financial crisis in 2007-08, the rise of digital banking and Industry 4.0, and the Covid-19 pandemic in 2020 and beyond, the company faced an array of challenges and opportunities faced. Yet, it continued to grow due to its business strategy.
J.P. Morgan Chase & Co enhances its services with further acquisitions
In 2004, J.P. Morgan Chase & Co. merged with Bank One in a bid to leverage the latter’s consumer banking business that can complement its own well-established investment and commercial banking business, making is ready to take on the largest bank in the United States – Citigroup.
Plus, the synergies would enable the JPMorgan Chase & Co. to reform the company, enhance business operations, and cut down costs. The icing on the cake was bringing Jamie Dimon, the CEO of Bank One, as the president and COO of the merged entity. He soon went on to become the CEO of J.P. Morgan Chase & Co. and led it to greater heights.
In 2006, Chase purchased New York Mellon’s retail and small business banking network, expanding its footprint in New York, New Jersey, and Connecticut and Collegiate Funding Services, an education finance company.
JPMorgan Chase & Co. continued its acquisitions strategy even during the most challenging times of all – the subprime mortgage meltdown and subsequent 2007/08 financial crisis. It acquired the investment bank Bear Stearns and the banking operations of Washington Mutual. This not only helped prevent a systemic crisis but also bolstered JPMorgan and added to its portfolio of companies.
What’s worth noting here is that JPMorgan Chase & Co. stood beside and worked alongside the government during the most critical time.
In 2010, the company acquired J.P. Morgan Cazenove having initially operated as a joint venture with the UK investment bank, Cazenove. The very next year, in 2011, Chase led General Motors historic initial public offering (IPO) – the world’s largest IPO back then, highlighting its stature as the world’s premier financial services company.
JP Morgan Chase’s Digital Transformation Strategy
When it comes to digital transformation, Chase has been ahead of its time with an eye on the future.
While it is indeed a traditional organization with a long, illustrious history, JP Morgan Chase is constantly modernizing and staying a step ahead of the latest trends, including cloud computing, machine learning, artificial intelligence, and blockchain among others to offer a holistic digital experience to cater to its customers’ ever-changing needs.
JP Morgan Chase & Co’s Digital Transformation From 2010 to Present
With the financial crisis behind it, JPMorgan Chase & Co. prepared itself to become future-ready.
Chase released mobile banking features in 2010, empowering its customers to manage their accounts and finances, seamlessly.
Plus, the company announced the use of supercomputers to enhance overall business operations and customer experience.
In 2019, JP Morgan launched JPM Coin – a digital token to settle transactions between its wholesale payment business’ clients. Just a couple of years later, in 2021, JPMorgan Chase launched an app-based current account. Then in 2022, JP Morgan Chase embraced the much talked about blockchain technology for collateral settlements.
JP Morgan Chase & Co.'s sustainability initiatives
No, JPMorgan Chase & Co. is not just a global leader in financial services catering to the needs of the world’s most important corporations and government. JPMorgan Chase & Co. is much more than that. It’s a socially responsible firm that goes above and beyond to make the world a better place.
Following are a few of the steps Chase has taken over the years to do just that:
- Joined the 100,000 Jobs Mission to promote hiring of U.S. military veterans and military spouses.
- Launched Women on the Move initiative to empower women in the workplace
- Set up a Global Health Investment Fund to finance final-stage drug, vaccine, and medical device studies to find healthcare solutions
- Initiated a New Skills at Work program and invested up to $600 million to upskill people to stay relevant in a dynamic working world
- Committed $100 million to support and scale efforts to transform Detroit’s economy
- Implemented New Skills for Youth program to address the economic opportunity crisis young people face and enable them to land jobs
- Doubled down on investing in world’s communities and cities that have been ignored and not yielded the benefits of economic growth through a global $500 million initiative, AdvancingCities
- Inaugurated the Advancing Black Pathways initiative to provide more personal and professional growth opportunities to black people
- Supported the summer youth employment programs (SYEPs) across 24 cities in the United States with a $20 million commitment.
- Committed to aligning key sectors of portfolio with the goals of Paris Agreement to create a sustainable future and address climate change by achieving net-zero emissions by 2050.
Key Takeaway 3: Digital Transformation Can Give You An Edge To Win Market Share
Regardless of the industry, geographic region, business vertical, or target audience you cater to, digital transformation is essential for your business. Without it, you cannot survive let alone thrive.
JPMorgan Chase & Co. knew it and hence, gained a first-mover advantage in the digital space as it invested heavily and committed to transforming the business.
The result? It leveraged emerging technologies such as cloud computing, machine learning, artificial intelligence, and blockchain among others to scale up.
Why is JP Morgan Chase & Co. So Successful?
JP Morgan Chase & Co. is a result of a number of mergers and acquisitions over the decade. From being the pioneer of television banking to ushering in the era of online banking, JP Morgan Chase has a long history.
JP Morgan Chase & Co. is the oldest, largest, and one of the most renowned financial companies in the world. With its history tracing back to 1799 and a network of organizations in over sixty countries worldwide, JP Morgan Chase & Co.’s influence spreads far and wide.
What Are The Core Business Principles of JP Morgan Chase & Co.?
Here are JP Morgan Chase & Co.'s three core principles:
- Delivering exceptional client service
- Acting with integrity and responsibility
- Sporting the growth of employees
What Is The Mission of JP Morgan Chase & Co.?
JP Morgan Chase & Co. aims to ensure inclusive, sustainable growth and become the most respected financial services company in the world and the foremost choice of individuals, corporations, and governments worldwide.
Who Owns JP Morgan Chase & Co.?
JP Morgan Chase & Co. is owned by:
- Institutional investors such as BlackRock, The Vanguard Group, State Street, Fidelity Investment, and Capital Research & Management among others. Collectively, they own up to 76% of JP Morgan Chase & Co’s common stock.
- General public a.k.a individual investors. Collectively, they own up to 23 percent of JP Morgan Chase & Co’s common stock.
- Company insiders and board executives, including James Crown, Jamie Dimon, and Daniel Pinto. Collectively, they own up to 0.6 percent of JP Morgan Chase & Co’s common stock.
JP Morgan Chase & Co.’s Growth By Numbers
JP Morgan Chase & Co. is among the list of world’s select-few companies that need no introduction and are recognized globally. With illustrious dating back to 1799 and over 1200 predecessor organizations joining together to form JP Morgan Chase & Co., it doesn’t come as a surprise that the firm’s name is closely tied to innovations in finance and growth of the US as well as world economies.
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