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Friday, January 29, 2010

J.P. Morgan is going more global

Today the Financial Times reported the J.P. Morgan Chase & Co. (JPM) plans to launch a global corporate banking unit in order to sell loans and commercial banking services to multinational corporations. The unit is expected to have 300 bankers and to be focused on fast-developing markets like India, Brazil and China. Germany, Switzerland and the U.K. will also be targeted.
As Financial Times was told by Greg Guyett (the head of J.P. Morgan for Japan) who is expected to lead the unit from London "We are doing this now for a couple of reasons ... to balance our growth and increase the portion of our revenues that comes from outside the U.S. and from emerging markets in particular; and because, after the crisis, a number of our competitors are challenged".

Now some commentaries...

A notion that emerges from this news is that they see the end of the crisis coming. As this crisis was caused mostly by a financial distress and vanishing financing sources, an intention to build such a vehicle might mean at least two things:
  • They expect the need for financing to rise so they prepare the supply.
  • They don't expect any more great tremors of similar kind to the previous ones in their industry.

Surely it will take time for the unit to be built and become fully functional but their intention speaks there are no more severe shaking expected in the banking and financing industry. If that proves to be true what could happen in form of hard times for one company or another would be out of pure competition and not because of a excessive systematic risk level.

Another notion from this news is they have the resources to build such a global vehicle and now is the best time to start doing it in order to be ready when the big multinational corporations decide it's time to borrow again.

This will definitely make things harder for Citigroup or HSBC which are two of the other major global financing institutions. We'll see what the future holds but whatever happens it's always a good thing for the competitions and clients to have another big player in the field.

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