The Business has an interesting story about JP Morgan. The essence is that the banking giant began to look as if it might have lost the plot a bit over the last few years. But now, the smart money is on the firm perhaps bringing back the glory days of good old John Pierpont.
The story goes that the 2000 merger of JP Morgan and Chase has finally begun to pay off. The problem was that, almost as soon as the merger deal was announced, the wheels fell off the market. The banking industry went into three years of doldrums. But the bank is now starting to leverage clients and the combined investment banking units are slowly moving up the league table.
The Bank One deal also looks sweet, and with it comes Jamie Dimon - the bank's CEO-in-waiting, who many believe is made of the right stuff to get JP Morgan back up where they say it belongs. And let's not forget the JP Morgan/Cazenove deal in the UK. That arrangement should see rich dividends for the bank in Europe.
On the investment banking side, JP Morgan is currently in second place in announced US M&A and up to fifth place in global IPOs. It's been some time since John Pierpont's legacy has been playing around at those lofty heights.
And the bank's shares are seemingly on the comeback trail, too. From a low of $15 27 months ago, the stock closed up to $37 late last week. The bank's shares have risen 2% this, at a time when rival Citigroup's have fallen 7%. There have been media reports which suggest that some investors are bullish on the JP Morgan share price as they feel earnings are going to significantly improve in 2006, by which time most of the merger-related cost savings will have kicked in. The bank has said that it hopes to lower its annual operating costs by up to $3bn by 2007. Some analysts feel that the savings may come in even higher, at $4bn.
Many now feel that the problems of recent years are now truly consigned to history. JP Morgan has a full tool-kit - all the bank needs now is a kind market and bingo! The glory days will soon be back.
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