JPMorgan Halts Clearing Services for 500 Non-U.S. BanksHugh Son
JPMorgan Chase & Co., the largest U.S. lender, said it will halt clearing services for about 500 foreign banks and discontinue checking accounts for “politically exposed persons” in other nations.
JPMorgan announced the changes as it reported its first quarterly loss under Chief Executive Officer Jamie Dimon after a $7.2 billion charge tied to litigation and regulatory probes. Dimon told employees last month that the bank was undertaking an “unprecedented effort” to comply with watchdogs.
“We’re trying to meet new standards we’ve set for ourselves and that our regulators want us to set to reduce risk to our company, particularly on anti-money laundering,” Dimon, 57, said on a conference call today.
The initiative also involves discontinuing loans to check-cashing businesses and ending checking accounts for “certain foreign-domiciled clients,” the bank said. The changes are part of a strategy of reducing risk through client selection, the New York-based bank said today in a presentation.
JPMorgan’s presentation included a separate list of products and services the bank is exiting as part of an effort to simplify the company. The targeted businesses have “outsized operational risk” and include physical commodities, student lending originations, identity-theft protection and credit insurance.
Dimon said the exits will probably cost the bank “a couple hundred million dollars” in revenue and that not all of the businesses being simplified were very profitable. The company posted revenue of about $97 billion in 2012.
“It’s a core business principle to always simplify your business and to focus on where you can really win,” he said. “It’s a little more amplified this time because, obviously, there’s a new regulatory environment.”