“Zames is expanding his role,” JPMorgan Chairman and CEO Jamie Dimon said in an internal memo obtained yesterday by Bloomberg News. Paul Compton, currently co-chief administrative officer of the corporate and investment bank, will become CAO of the company and report to Zames, according to the memo.
Bisignano’s exit buttresses Zames’s stature as a potential successor to Dimon, 57. Zames, 42, was promoted twice within the span of 100 days in 2012 as he helped Dimon regain control of a U.K. unit’s wayward bets on credit derivatives that cost the bank more than $6.2 billion. Zames, who began last year as co- head of the fixed-income business, was named chief investment officer in May and co-COO in July.
Bisignano, 53, will begin his new job today, Atlanta-based First Data said in a statement. First Data, owned by private- equity firm KKR & Co., is the largest merchant acquirer in the U.S., helping retailers accept credit- and debit-card payments. The New York Times reported on Bisignano’s departure yesterday.
Technology and security were among Bisignano’s responsibilities as co-COO, and he held executive roles within the payments industry earlier in his career. He was Citigroup Inc.’s CEO of global transaction services from 2002 to 2005 and executive vice president of consumer lending in the early 1990s for First Fidelity Bancorp.
“At Citigroup, he built -- from the ground up -- the largest transaction-services business in the world and oversaw the largest technological and operations businesses in the financial services industry,” First Data Chairman Joe Forehand said in the company’s statement. “Having an executive of his caliber is exactly what we need to continue and grow our leadership role in payment processing globally.”
First Data handled 16.7 billion purchase transactions made with general-purpose credit, debit and prepaid cards in the U.S. last year, according to the Nilson Report, an industry newsletter based in Carpinteria, California. Bank of America Corp. was the second-biggest merchant acquirer with 13.5 billion.
Bisignano succeeds Ed Labry, whom the board designated interim CEO in January after predecessor Jon Judge retired for health reasons. Labry will keep his other role as president of retail and alliance services, First Data said.
Lou Rauchenberger, who was co-chief administrative officer of JPMorgan’s corporate and investment bank along with Compton, remains as the lone CAO of that unit, according to Dimon’s memo.
The loss at the firm’s chief investment office was the focus of a probe by the U.S. Senate Permanent Subcommittee on Investigations. The panel said last month that JPMorgan dodged regulators and misled investors as losses swelled on a bet by trader Bruno Iksil, who was dubbed the London Whale because of the size of his position. Managers manipulated risk models and pressured traders to overvalue their positions in an effort to hide mounting losses, according to the committee’s report.
In January, the Federal Reserve and Office of the Comptroller of the Currency censured JPMorgan over failures in risk controls for the derivatives trades as well as for lapses in anti-money laundering controls.
The Whale trades preceded other departures, starting with Chief Investment Officer Ina Drew’s exit within a week of the initial disclosure of the loss. James E. Staley, who was at the company for more than 34 years and was once seen as a candidate to become CEO, quit in January to join BlueMountain Capital Management LLC, the hedge-fund firm that profited from the bank’s trading loss.
Credit default swaps on First Data have fallen 16.2 basis points to 707.1 basis points since April 26, the lowest level in more than six weeks, according to CMA, the data provider owned by McGraw-Hill Cos. that compiles prices quoted by dealers.
The swaps typically fall as investor confidence improves and rise as it deteriorates. The contracts pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
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