JPMorgan Chase & Co. chief executive Jamie Dimon reshuffled managers just below him, signalling that the biggest U.S. bank is preparing for life after its famed boss.
The moves come two weeks after JPMorgan said it had lost nearly $6-billion from bad derivatives trades on corporate debt, representing a huge black eye for a chief executive long praised for his risk-management skills.
The management moves will mean a number of senior positions are jointly held by two executives. Analysts said the shared responsibility is a response to the trading losses that came from the bank’s chief investment office.
“What happened in the CIO office was that there weren’t enough people taking a close-enough look,” said Richard Bove, an equities analyst at Rochdale Securities.
“That was a lesson for every division in the company.”
This is at least the third management shakeup in three years for the bank, which has long faced questions about who would lead it after Mr. Dimon, 56, steps down. In a June 2011 shakeup, reporting lines were streamlined.
Mr. Dimon has said he likes to move promising executives around to give them experience in different parts of the bank, a management philosophy popularized by General Electric Co. The moves were being lined up earlier this year, but were delayed when multibillion-dollar losses surfaced in a portfolio of credit derivatives, bank spokesman Joseph Evangelisti said.
Mike Cavanagh, 46, and Daniel Pinto, 49, will become co-CEOs of the Corporate & Investment Bank. Cavanagh, who was once chief financial officer for the bank and is now head of Treasury and Securities Services, will oversee lending and investment banking businesses such as merger advisory.
Mr. Pinto, who heads the bank’s business in Europe, the Middle East and Africa as well as its global fixed-income business, will oversee all trading businesses.
Jes Staley, 55, currently CEO of the Investment Bank, will become chairman of the Corporate & Investment Bank, a new position.
Mr. Cavanagh is a long-time protégé of Mr. Dimon. When Mr. Dimon was president of Citigroup, Mr. Cavanagh was chief administrative officer.
In 2000, Mr. Cavanagh followed Mr. Dimon to help revive Banc One Corp. as head of strategy and planning when Mr. Dimon became the bank’s CEO. When JPMorgan Chase bought the Chicago bank in 2004, Mr. Dimon became chief operating officer and Mr. Cavanagh was chief financial officer, a key position of influence with investors and Wall Street.
Two years ago, Mr. Dimon shifted Mr. Cavanagh to run the division that sells cash management and securities custody services to corporations, and three months ago he deputized his deputy to lead the autopsy of the problems at the CIO.
“Jamie usually gives [Mr.] Cavanagh jobs heavy on management and strategy,” a former JPMorgan executive said.
When Mr. Dimon faced analysts earlier this month in an extended earnings call, he deputized Mr. Cavanagh to make an extended presentation on what went wrong at the CIO, who was responsible and who was paying the price.
Mr. Cavanagh’s star is rising. But Mr. Staley, once seen as a potential successor to Mr. Dimon, seems to have been pushed aside, analysts said. Mr. Staley, a 23-year veteran who began his career at Morgan Guaranty Trust Co., is taking a new position as chairman of the corporation and investment bank, a title that on Wall Street often signals an ambassadorial role with clients.
Mr. Staley had run JPMorgan’s private banking and asset management units before ascending to the investment bank.
Gordon Smith, 53, will have mortgage lending and retail banking added to his remit, giving him oversight of all consumer banking businesses.
The former American Express Co. executive currently oversees credit cards and auto lending. For now, Mr. Smith will run the business together with Todd Maclin, 56, but in 2013, Mr. Maclin will become a chairman of the consumer business.
Frank Bisignano, 52, who was put in charge of overhauling the mortgage business last year, in addition to his role as chief administrative officer of the bank, will become co-chief operating officer for JPMorgan as Mr. Smith takes on the mortgage business.
Mr. Bisignano will share the COO post with Matt Zames, 41, who will remain head of the Chief Investment Office and Mortgage Capital Markets.
In May, Mr. Zames was put in charge of the CIO office, the site of the London Whale trades. He was given responsibility for unwinding the losing portfolio and overhauling the office. Mr. Cavanagh was named head of a team of senior executives overseeing the bank’s response to the CIO losses.