JPMorgan’s Timon warns of $ 1 billion loss to Russia

New York, April 4 (Reuters) – JPMorgan (JPMN) Chief executive Jamie Dimon said on Monday that it would lose about $ 1 billion as a result of its Russia exposure, first describing the magnitude of the bank’s potential losses from the conflict in Ukraine.

In his annual letter to shareholders, the chairman and CEO of the largest US bank urged the United States to increase its military presence in Europe. Its allies.

Dimon did not provide a deadline for JPMorgan’s potential Russia losses, but the bank is concerned about the secondary impact of Russia’s invasion of Ukraine on companies and countries. Russia calls its actions “special action.”

Global banks have described Russia’s revelations in recent weeks, but Dimon is the highest-ranking world trade leader who has yet to comment on the broader impact of the conflict.

“The United States must be prepared for the possibility of an extended war in Ukraine with unpredictable consequences. We must be prepared for the worst and believe in the best,” he wrote. (For five key notes from Timon’s letter, click to read more)

The bank said Monday that Dimon may continue as chairman when he resigns as chief executive.

In a statement to shareholders ahead of JPMorgan’s annual meeting in May, the bank found that most key shareholders should be Dimon’s chairman.

The board said it was a “public policy” to separate the functions of chairman and chief executive after Timon’s disappearance. Many shareholders have a common preference for splitting positions, it said.

Timon has done something funny by permanently saying he will resign in five years. In 2019, he said, the five-year clock has really started.

In a letter to shareholders, Timon referred to the relationship between the United States and China, and said that the United States should restructure its supply chain to restrict its scope for suppliers within the United States or to include only “complete allies.” He urged the United States to rejoin the Trans-Pacific Partnership (TPP), one of the world’s largest international trade agreements.

Commenting on the macroeconomic environment, Dimon said the number of Federal Reserve interest rate hikes “may be significantly higher than market expectations”. He also described the bank’s rising costs due to technical investments and acquisition costs.

This letter is the 17th letter to Timon’s CEO. Although Timon is not the only CEO of a top American bank to write such letters, he has become a must-read for the perspective the Wall Street elite and policymakers have on his political and economic ideas.

‘Fortress Balance Sheet’

The letter comes this year as the Russia-Ukraine war and high inflation hit the economy, and Dimon faces new skepticism from investors about spending.

Some are questioning JPMorgan’s plans to increase spending on the bank’s information technology and campaigns to gain market share in businesses and geographical areas that are currently outpacing rivals such as Germany and the United Kingdom.

JPMorgan decided earlier this year to hold its first Investor Day since the epidemic began to address doubts about its spending plans. The meeting will be held on May 23.

Timon has been building what the bank calls the “fortress balance” for more than a decade, and said JPMorgan is strong enough to withstand losses of $ 10 billion or more and is “still in good shape.”

Timon wrote that Russia was not worried about the bank’s exposure, saying the war in Ukraine would slow the world economy and affect geopolitics for decades.

“We face challenges at every turn: an epidemic, unprecedented government action, a strong recovery after a sharp and deep global recession, a highly polarized US election, rising inflation, a war in Ukraine and dramatic sanctions against Russia,” he said. .

Commenting on the acquisitions, Dimon said the bank would reduce its share repurchase next year to meet the capital requirements required by federal rules.

JPMorgan has spent nearly $ 5 billion on acquisitions over the past 18 months. Timon said this would increase “increasing investment costs” by about $ 700 million this year.

Investments in technology will add $ 2 billion to spending this year, Dimon said.

Additional Statement by David Henry; Editing by Michelle Price, Muralikumar Anandaraman and Nick Jiminski

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