Business

Jamie Dimon: The Narrative Is False, Millennials Love Banks!

In an interview on FOX Business Network’s (FBN) Mornings with Maria (weekdays, 6a-9a/ET), JPMorgan Chairman and CEO Jamie Dimon discusses retail banking, the future economy of post-Brexit Europe, and the competition of Chinese banks with Maria Bartiromo.

Jamie Dimon

Jamie Dimon on retail banking:

“First of all, we’ve always — we’ve always been investing in branches and technology, in ATMs and iPhones and services. The millennials love — I think 57 percent of our new accounts are millennial. People are always saying millennials don’t like banks. I say yes, and I always say until they get that first paycheck. Then all of a sudden, they say what do I do with this and they love the direct deposit, moving money. We have a whole new round of products and services coming.”

On the economic future of post-Brexit Europe:

“I’m worried about the Eurozone and, you know, to me, the issue about Brexit was always about what does it do to the future of the Eurozone? So the Eurozone is one of the great endeavors of all time. Mankind got together and said let’s live in peace and not kill each other every time we have a problem. World War II and World War I but the Napoleonic Wars, the Franco-Prussian Wars, the Hundred Years War, the War of the Roses. And they wanted a common market. So those two things still exist in the Eurozone and say let’s — let’s accomplish those things, though a common market would be a huge economic benefit for everybody. It kind of got bogged down and now it’s running into deep political issues and disagreements about how Brussels functions, labor flexibility, immigration rules and stuff like that. So I think the statement perfecting the union, I think going backward is going to be really hard.”

On European banks:

“So I think the banks in Europe, they need to be allowed to finance the growth of Europe. You know, banks in Europe are far more important to Europe than banks are here. You know, it’s a much bigger part of their financial markets and, you know, I mean they’ve been through years of rules and regulations. Let them take a deep breath and finance the economy. That’s what I’d do.

On trade:

“So, look, I think there are legitimate complaints about trade and though — you know, I’m not in favor of just throwing out, you know, NAFTA or throwing out — you know, I — I like TPP personally. But I think it’s pretty legitimate for a new administration to come in and say there are flaws. There are flaws in this, there are flaws in that, let’s open it up and do the right thing for America. We’ve given away too much. There are legitimate complaints. And so, you know, to me, to sit down at the table and try to sort those things out, I’m hoping that the president-elect, when he’s president, comes back and says I’d renegotiate the best trade deals for the American public.”

On competing with Chinese banks:

“You know, look, I — look, we have to compete with the Chinese banks. And, you know, and I — and people ask me, seriously, do you really mean that? Yes, I really mean it. They have a huge home market. They’re going international. Their companies are going international. I want to make sure that America has a JPMorgan Chase, too, one day. And so some of the rules and requirements they’ve set up — and I won’t go into the detail of them — basically put some American banks at a disadvantage to other banks. And now you see — you know, I’m not in favor of this, but you see some Japanese banks, some European — Japanese countries — the Jap — Japan, the European countries, China saying they’re not going to follow some of these new rules. They think they’ve become excessive. And then so it makes it even harder that, you know, if Americans not only just follow it, we gold plate it and they don’t have to, that can make it worse. So I’m hoping at the end of the day that those regulators get together and negotiate a — it doesn’t have to be exactly the same, but a generally fair deal for everybody. You know, financial services should be part of trade, too. And so we shouldn’t act like this is completely separate. It should be part of trade. We have to compete. And then we help all these American companies go around the world and compete around the world.”

Please see below for full transcript:

Jamie Dimon: I’m worried about the Eurozone and, you know, to me, the issue about Brexit was always about what does it do to the future of the Eurozone?

So the Eurozone is one of the great endeavors of all time. Mankind got together and said let’s live in peace and not kill each other every time we have a problem.

(INAUDIBLE) World War II and World War I but the Napoleonic Wars, the Franco-Prussian Wars, the Hundred Years War, the War of the Roses. And they wanted a common market.

So those two things still exist in the Eurozone and say let’s — let’s accomplish those things, though a common market would be a huge economic benefit for everybody.

It kind of got bogged down and now it’s running into deep political issues and disagreements about how Brussels functions, labor flexibility, immigration rules and stuff like that.

So I think the statement perfecting the union, I think going backward is going to be really hard. Monte dei Paschi — you know, and, you know, we — as you know, we tried very hard to have a private solution for that. Monte dei Paschi is a small little issue, OK?

Even the ECB came out and said it’s an $8 billion issue. The Italian government can take care of that with a snap of their fingers. It’s a manmade problem because we’ve put rules in place that don’t allow them to do it.

And so — and it was the American — the Italian government doesn’t want to hurt retail investors. And I agree with them, by the way. I think that would be a shame.

So that’s not a financial crisis. That’s a little problem that’s being allowed to fester because we don’t have the a real solution for it, a simple solution.

So I think the banks in Europe, they need to be allowed to finance the growth of Europe. You know, banks in Europe are far more important to Europe than banks are here. You know, it’s a much bigger part of their — their financial markets and, you know, I mean they’ve been through years of rules and regulations.

Let them take a deep breath and finance the economy. That’s what I’d do. Fix Monte dei Paschi so it’s not a flash point for — for the economy.

BARTIROMO: Have you begun to think about what you’re going to do…

Jamie Dimon: The real issue for Europe, by the way, is to focus on the issues which have caused the very slow growth. That is a huge political issue everywhere else and that is around, you know, you hear these complaints around labor flexibility, capital inflexibility, taxation policies. If they don’t do that, the Eurozone will — is going to be relegated to decades of low growth. And I’m not sure that’s politically sustainable.

BARTIROMO: Have you just — have you begun to think about — you — obviously, you have.

Have you decided on anything in terms of what you’re doing with your people in London as a result of Britain leaving the European Union?

What’s going to happen there?

Jamie Dimon: All right, so it is — this is a negotiation between one party and 26 others, all of whom have a veto. So if anyone thinks they know the outcome of this negotiation, they aren’t right. And we have to follow the laws of the land.

So we’re not trying to change the will of the European people or the British people. We have to do that. But since we don’t know what it is, we have to look at the potential outcomes.

And they go from not much if they have (INAUDIBLE) for it, we can do what we do today. And if they take away all of these rules and requirements, we could move lots of people. I don’t want to do that. I’m not doing that and saying it as a threat, but we would have to put people — maybe data centers and stuff — in the Eurozone countries.

So we are preparing what our response will be, hoping there’s some kind of transition period. But again, we’re not — all that means is that when they negotiate (INAUDIBLE), they say, OK, banks, here are the new rules. You’ve got three years to accommodate to them.

If we have to do it right now, we have to — we’re guessing. So you have to make a lot of changes in the guessing and that could be very expensive and not good for the Eurozone. That can inhibit growth in the meantime.

So we’ll be prepared. We’ll — we’ll do whatever we have to do to serve our customer the day after Brexit and, you know, my guess is it’s going to be pretty painful.

BARTIROMO: You know, that’s one area that people are questioning in terms of the Trump economic policies, the trade. I mean he already said that he’s going to be meeting with Theresa May in the UK.

Your thoughts on that part of, you know, the economic policy, given that JPMorgan has businesses all over the world.

Jamie Dimon: Yes. Well, and so do most of the companies around the world. So, look, I think there are legitimate complaints about trade and though — you know, I’m not in favor of just throwing out, you know, NAFTA or throwing out — you know, I — I like TPP personally. But I think it’s pretty legitimate for a new administration to come in and say there are flaws. There are flaws in this, there are flaws in that, let’s open it up and do the right thing for America. We’ve given away too much. There are legitimate complaints.

And so, you know, to me, to sit down at the table and try to sort those things out, I’m hoping that the president-elect, when he’s president, comes back and says I’d renegotiate the best trade deals for the American public.

And then also what I call trade assistance. The — while trade is generally very good, there are negatives to it. And we should acknowledge those negatives. If someone loses their job from it, loses income from it, has to move because of it, you know, let’s acknowledge that and fix that and so that, you know, you don’t have everyone wins a little bit and some people lose a lot.

You know, so…

BARTIROMO: (INAUDIBLE) that he’s been so vocal and there you have Carrier saying, OK, we’re not going to send all these jobs out. And then you have Ford saying, OK, we are not going to do this — this plant in Mexico or we’re going to change our plans and do more here.

Do you think he’s done a good job of doing this or is it calling out companies not a good job?

Jamie Dimon: I think — I think at those slightly different. You know, that’s not — that’s not a policy yet. He’s not president yet. You know, eventually he’s going to be president and you’re going to have to (INAUDIBLE) coherent consistent policies that companies need. And they need certainty. In fact, you hear them. They talk about it. You know, the regulatory certainty, trade certainty, tax certainty are very important for the confidence of American business.

And by the way, that’s both small and large companies. That’s not just the large companies. And so I think this is more. You know, we had an election. We made some promises and stuff like that. He says he’s going to bring a lot of benefits to some of these companies and he’s asking them, in the meantime, not to do X. You know, so a lot of them have come out and said, OK, we won’t, because we believe you’re going to make these other things better.

BARTIROMO: Yes.

Jamie Dimon: We’ll — so we’ll see.

BARTIROMO: And then there’s China. A lot of the Chinese banks, they’re the largest banks in the world and yet they have an easier sort of rating from the — the Financial Stability Board than the U.S. banks like a JPMorgan, that is much stronger on a financial sort of, you know, the power or your balance sheet.

So…

Jamie Dimon: (INAUDIBLE).

BARTIROMO: — I don’t get that.

Jamie Dimon: No, I don’t get it, either. I never did.

You know, look, I — look, we have to compete with the Chinese banks. And, you know, and I — and people ask me, seriously, do you really mean that?

Yes, I really mean it. They have a huge home market. They’re going international. Their companies are going international. I want to make sure that America has a JPMorgan Chase, too, one day.

And so some of the rules and requirements they’ve set up — and I won’t go into the detail of them — basically put some American banks at a disadvantage to other banks. And now you see — you know, I’m not in favor of this, but you see some Japanese banks, some European — Japanese countries — the Jap — Japan, the European countries, China saying they’re not going to follow some of these new rules. They think they’ve become excessive.

And then so it makes it even harder that, you know, if Americans not only just follow it, we gold plate it and they don’t have to, that can make it worse.

So I’m hoping at the end of the day that those regulators get together and negotiate a — it doesn’t have to be exactly the same, but a generally fair deal for everybody.

You know, financial services should be part of trade, too. And so we shouldn’t act like this is completely separate. It should be part of trade. We have to compete. And then we help all these American companies go around the world and compete around the world.

BARTIROMO: Jamie, let me wrap it up on the retail banks.

The retail bank looks completely different than it did 10 years ago. You’ve been able to attract younger people. You’ve got really great marketing. You’ve got this new Sapphire card.

Jamie Dimon: Yes.

BARTIROMO: What — tell me about the retail banking, what you’ve done to make such an improvement.

Jamie Dimon: Well, let me give credit to a lot of people in the retail bank. Gordon Smith and his team in — you know, first of all, we — we — we’ve always — we’ve always been investing in branches and technology, in ATMs and iPhones and services. The millennials love — I think 57 percent of our new accounts are millennial. People are always saying millennials don’t like banks. I say yes, and I always say until they get that first paycheck. Then all of a sudden, they say what do I do with this and they love the direct deposit, moving money.

We have a whole new round of products and services coming. Gordon and his team, you know, Gordon came out of America’s (INAUDIBLE) team came up with the Sapphire, which is — was so good, the announcement is going to hurt our results this quarter because of just the additional (INAUDIBLE) marketing expense on it.

And so it’s great. We’re — we’re using technology in a — in a million different ways to drive better products and services and you’re going to see this year, one after another things coming out. Some may be in beta. Some may be real. Some may not work. (INAUDIBLE) it all work. But there are some really exciting products coming it.

BARTIROMO: Did you say 57 percent of new customers…

Jamie Dimon: Our new — our new accounts in the retail bank are millennial.

BARTIROMO: That’s terrific. I mean at some point, they’re — they are going to have money.

Jamie Dimon: Yes.

BARTIROMO: And is a — they’ll — they’ll be loyal to JPM, you hope?

Jamie Dimon: Yes.

BARTIROMO: So, of course, investors want to know what this all means for them. If your expenses are coming down and your earnings are going up, are you going to be able to pay out more money to shareholders?

Talk to us about that.

Are you going to be able to…

Jamie Dimon: I’m going to — I have to — to mirror on that one, because of where we are. But — but we’ll — we’ll talk more about that on investor day and…

BARTIROMO: OK. Because people want to know if you’re going to be able to pay 100 percent out (ph), 100 percent of earnings out to shareholders.

Jamie Dimon: Well, I — I — I have a different view of that. You have to go back to how I looked at it and what’s paid out to shareholders. So, you know, I’ve always believed you have a consistent dividend policy.

The next thing you really want to do with your capital is invest in the future. If you have an opportunity to invest in the future, I’d rather do that than buy back stock. It’s said — and the last thing is if you buy back stock, it’s not the same thing as buying back stock at this price and then you buy it back at that price.

And so I think you have to determine how you’re going to handle that over time.

BARTIROMO: I also…

Jamie Dimon: Where — where your growth opportunities are, what price you’re buying back the stock and then do what’s in the best interests of the shareholder.

BARTIROMO: I also remember when, you know, the Feds were being so strict in terms of what you could pay out and — and how much you can pay out.

You said, oh, yes, well, we’ll just do a special dividend.

Would you scrap a special dividend, if, in fact, you were able to pay dividends better and on a more normalized basis?

Jamie Dimon: Yes. So I’m not in favor of special dividends. I just think you could end up with too much capital and you don’t have any way you can use it in the short run and think of two or three or four years and your stock is very high, you know, (INAUDIBLE) in your show (INAUDIBLE) about buying it back. That is a rational thing to consider.

That’s not my favorite outcome.