Jamie Dimon, who built JPMorgan Chase & Co. into the world’s biggest investment bank, said threats to its dominance may come from Beijing, Silicon Valley and a San Francisco-based rival with a stage-coach logo.
“We know there are going to be attacks everywhere,” Dimon told investors at an annual meeting yesterday at the firm’s New York headquarters. Asked about challengers, the chief executive officer cited companies from Industrial & Commercial Bank of China Ltd. to Google Inc. Wells Fargo & Co., founded in 1852 to serve California’s Gold Rush pioneers, will be “a major investment bank” within five years, he said.
Dimon, 57, guided JPMorgan through the financial crisis without posting a quarterly loss and expanded the firm by acquiring rivals that faltered. As the company grappled with costs from government probes last year, its profit was surpassed by Wells Fargo, the fourth-biggest U.S. lender, which relies most on retail banking and mortgages.
“My operating assumption has always been and always will be that we are going to have huge, tough competition from Goldman Sachs and Wells Fargo to some new entrants,” Dimon said. “Wells Fargo will be in our business. I have enormous respect for them.”
Wells Fargo, led by CEO John Stumpf, 60, has been expanding its securities unit. The lender opened trading floors in 2012 in Charlotte, North Carolina, bolstering a securities business acquired with the purchase of Wachovia Corp. four years earlier.
ICBC, based in Beijing, is seeking to triple earnings from outside its home country by 2016. China’s biggest financial firms are “ambitious” and have “strategic reason to win,” Dimon said.
“They’re huge, their clients are huge,” he said. “I expect very large, tough Chinese competitors all around the world.”
JPMorgan generated $26.6 billion of revenue from corporate advisory, underwriting and trading in 2013, the most of any global investment bank, according to data compiled by Bloomberg. Goldman Sachs Group Inc., the major U.S. bank most reliant on trading, had $34.2 billion in total revenue, including other businesses such as asset management.
California technology companies are delving into electronic payments. Google, based in Mountain View, created Wallet, a program that lets users make transactions in stores and online with their smartphones. Cupertino-based Apple Inc., which has more than 400 million credit cards on file with its iTunes Store, is exploring an expansion of its mobile-payments system, a person with knowledge of the matter said last month.
EBay Inc.’s PayPal unit is a leading online payments system, which accounts for 40 percent of the San Jose-based company’s revenue and has 143 million active users.
Technology companies “all want to eat our lunch,” Dimon said. “I mean every single one of them, and they’re going to try.”
Dimon may be overstating his firm’s vulnerability to blunt criticism of its size, said Erik Gordon, a business professor at the University of Michigan in Ann Arbor. JPMorgan is the biggest U.S. bank by assets and the country’s largest credit-card lender. It counts 80 percent of the Fortune 500 as clients, according to presentations at yesterday’s meeting.
“He’s downplaying the fact that at the end of the day, JPMorgan is probably as powerful as any financial institution, including going back to the original JPMorgan,” Gordon said in a telephone interview. “It’s his way of saying, ‘Don’t be afraid of us and how big we are.’ My guess is that he doesn’t really go home at night and worry about Wells Fargo.”
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