Finance

Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

JPMorgan Chase & Co.'s chief operating officer Matt Zames is bidding the bank farewell. Investors needn't follow.

The departure of 46-year-old Zames, considered a possible successor to CEO Jamie Dimon, is surprising, given his upbeat letter in the bank's annual report, published just two months ago. He ended his five-page missive saying he had "never been more excited about the opportunities ahead". But the 61-year-old Dimon is unlikely to step down anytime soon, and Zames may have felt his opportunities at the bank were limited. 

Split Vote
JPMorgan shares advanced on Thursday despite the unexpected departure of its COO; roughly half the analysts covering the bank still rate it a "buy"
Source: Bloomberg

As was the case with Gary Cohn's exit from Goldman Sachs Group Inc., there's no need for shareholders to fret about this departure. JPMorgan's leadership bench is arguably just as deep as Goldman's and has withstood the spotlight twice in the past few years -- first when Dimon was diagnosed with throat cancer and more recently when his name was floated as a potential nominee for Treasury Secretary.

Like Goldman's Lloyd Blankfein, Dimon has been in his seat long enough for multiple potential successors to come and go, from Michael Cavanagh (who left for Carlyle Group LP but is now at Comcast Corp.) to Jes Staley (now at Barclays Plc, where things aren't going great, to say the least) to Charles Scharf (who joined Visa Inc., but recently stepped down). 

"There are plenty of people, if I was hit by a truck, who can run the company," Dimon said in late 2015 -- while expressing his oft-repeated desire to stick around for another five years -- "and there are plenty people five years from now that can run the company, so the board and I both feel comfortable about that."

There's no doubt the bank's talent pool is shrinking. It would help JPMorgan to eventually put another feasible successor in the COO role. But the roster of potential Dimon replacements is deep enough, including the five executives whose responsibilities have grown as a result of Zames's resignation.

Shareholders mostly shrugged off the news on Thursday, as JPMorgan's stock rose 1 percent. Better headlines may be coming for the bank on June 28, when federal regulators deliver results of the annual Comprehensive Capital Analysis and Review. 

On the Rise
Banks are widely expected to get permission to return more capital to shareholders after a regulatory capital review
Source: Company data, Morgan Stanley research

JPMorgan's shares are basically flat so far this year, as is the KBW Bank Index. But if CCAR results let JPMorgan and other banks boost dividends or buybacks as much as or more than expected, then any fears about succession will fade further into the shadows, where they belong.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. filing that outlines his non-compete requirements, and interviews with various publications on Thursday, suggest Zames either hasn't landed a new role or is holding his cards close to his chest until next February. He has told the New York Times he wants to run a business of his own.

  2. For those keeping track, they are CFO Marianne Lake, who now has the leeway to host quarterly earnings calls without Dimon; Gordon Smith, head of JPMorgan's consumer bank; Daniel Pinto, head of its corporate and investment bank; Mary Callahan Erdoes, head of asset management; and Doug Petno, head of JPMorgan's commercial bank.

To contact the author of this story:
Gillian Tan in New York at gtan129@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net