JPMorgan Combines Units in Order to Comply with Dodd-Frank

JPMorgan Combines Units in Order to Comply with Dodd-Frank
Joe Mabel [CC BY-SA 3.0], via Wikimedia Commons

JPMorgan Combines Units in Order to Comply with Dodd-Frank

JPMorgan Chase & Co. (NYSE:JPM), the USA’s largest bank by assets, combined its main business units, according to The Wall Street Journal. The units are primarily involved in brokering customer derivatives & securities trades, and sourcing & managing client assets. The move was done in order to comply  with the upcoming implementation of the 2010 Dodd Frank Financial Reform Law.

The new financial regulation was enacted by the United States Congress to prevent another financial meltdown and to promote accountability and transparency for big banks and the Wall Street.

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According to JPMorgan Chase & Co. (NYSE:JPM), merging its business units is a strategic and holistic approach to serve its customers more effectively and efficiently under the new regulations. The company believes that the new process would be beneficial and it would attract more customers.

At present, the official title of the new group led by Emily Portney was not yet identified. The company is currently referring to the three combined business units as the “Hub” for agency execution, clearing and collateral management.

Portney assumed her additional responsibility to supervise clearing and collateral management for the company last Thursday. She is also the head of the global futures and options of JP Morgan’s Investment Bank.

The Wall Street Journal cited Portney’s statement in an interview explaining the main reasons of company’s decision to consolidate its business units. According to her, the company wants to provide more seamless service to its customers. She said, “The regulatory environment and our clients are driving this. We are putting this all together so it’s much more seamless.”

We also reported previously that JP Morgan along with eight other global banks including  Bank of America Corp (NYSE:BAC), Barclays Plc (NYSE:BCS), Citigroup Inc. (NYSE:C), Credit Suisse Group AG (NYSE:CS), Deutsche Bank AG (ETR:DBK) (NYSE:DB) (FRA:DBK), Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS) and UBS AG (NYSE:UBS) submitted their “living wills” to regulators to comply with the requirements of the new financial reform law. Each bank presented their own resolution strategies on how to deal with any financial crises.

JPMorgan assured regulators that its resolution strategies would not result in losses and do not require extra-ordinary support from the United States Federal government.

Furthermore, global banks are also preparing to comply with Basel III, the international agreement on bank capital buffers approved by the Federal Reserve last June. The law requires banks to increase a common-equity for risk-based assets from 2 percent to 7 percent. Elements of Basell III will be implemented by January 2013.

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