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Banking hero

Jamie Dimon, the one top banker who survived crisis and thrived.

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IN a biography of Jamie Dimon titled The House of Dimon, one of the stories about the Chairman, President and CEO of JPMorgan Chase is that he walks around with a folded sheet of A4 paper in his pocket.
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"Of course, you can't run a business that is engaged in risky activities by their nature and not keep a very close eye on it, but as I tell my board, if we're wrong about something, this is the consequence. We may be wrong sometimes, but we'll be okay."

IN a biography of Jamie Dimon titled The House of Dimon, one of the stories about the Chairman, President and CEO of JPMorgan Chase is that he walks around with a folded sheet of A4 paper in his pocket. “He writes something down. That gets done. He blocks it out,’’ said one of the bank’s former board members David Novak.

That tells you a bit about Mr Dimon’s management style: Attention to detail. Always looking out for ways in which something can be improved. Makes sure he doesn’t forget it. And when it’s done, moves on, looking for the next thing.

Then there's his attitude to communication. In our conversation at the top floor of the Shangrila Hotel we get onto the topic of good writing. "There's this quote" he says. "I'm sorry I wrote you such a long letter - I didn't have time to write a short one.'

"I tell that to people in management. Sometimes they're talking and you don't understand what they're saying. So then I say: You know what? Stop talking. Put it on paper.''

It would seem that people who work for Mr Dimon are expected to be, at a minimum, clear-thinking, articulate and to the point. As he puts it: "If you want to treat the other person respectfully, get your thoughts together beforehand and lay them out in a clear, coherent way."

The financial crisis of 2008-09 destroyed the careers of many of Wall Street's top bankers. The CEOs of Citigroup, the Bank of America and Merrill Lynch, among many others, lost their jobs. Some even lost their companies, like the bosses of the investment banks Bear Stearns and Lehman Brothers.

But one top banker that not only survived but thrived, and indeed emerged with an institution even bigger and stronger, was Mr Dimon. Under his crisis-time leadership, JPMorgan Chase didn't need to be bailed out. It also took over the rump businesses of Washington Mutual - once America's largest savings and loan association - and Bear Stearns. Which makes apt the title of another biography of Mr Dimon: Last Man Standing. If bankers could be heroes, he would be one.

Eight years on from the crisis, he's standing taller. Despite shedding businesses, including private equity, physical commodities and consumer banking outside the US, JPMorgan Chase is America's largest bank and the world's most valuable by market capitalisation (US$245.1 billion as of Oct 6). Some 80 per cent of the Fortune 500 are its clients, as are almost half of US households and it has what Mr Dimon proudly describes as "a fortress balance sheet."

JPMorgan Chase operates in more than 100 countries, including Singapore, where it employs about 3,000 people. But it does no retail banking outside the United States. "It's very hard to compete in retail outside of our home market,'' says Mr Dimon. "We don't have the scale compared to domestic retail banks in their own market, the relevant domestic retails systems or the real estate. If I open 100 branches in Singapore or Mumbai, people wouldn't know Chase Bank. If I open 100 branches in the US, I'd have the local costs but none of the other additional expenses.''

Sixty-year-old Mr Dimon was born to high finance. Both his father and grandfather were stockbrokers. He once said that he read Graham and Dodd's Security Analysis - a dry treatise on value investing from the 1930s - while in high school, and liked it. Warren Buffet has described him as "a banker from head to toe". He has followed no other vocation since graduating from Harvard Business School in 1982.

In his 34 years in banking - starting with American Express, then with Citigroup, and then Bank One which merged with JPMorgan Chase in 2004, Mr.Dimon has navigated just about every financial crisis of his generation.

We talk about today's headwinds. Where might they come from? Brexit? China? The energy sector?

"This may surprise you,'' he says. "I'm sure there'll be some (headwinds) but I don't worry about it as much, because JP Morgan is here in good times and bad. My guess is that the number of companies we cover, such as in Singapore, will double in ten years. We navigate through the turbulence. In business we can't just pull way back because we're afraid of headwinds.

"Brexit poses some potential problems for us. People say 'you're threatening to move jobs.' (Prior to the Brexit referendum in June, Mr Dimon warned of up to 4,000 job cuts in the UK if it voted to exit the European Union). We're not threatening anything. We simply have to operate under the laws of the Eurozone and the laws are written in a certain way. So we may have to move people out. There's plenty of uncertainty and many important decisions are not upto us, it's upto them. But we'll deal with that when we get there.

"As for China, the likely outcome in 20-30 years is that they will have a fully developed market economy in a fully developed nation, with 30-40 per cent of the top global 3,000 companies. That's what we're planning for. And yes, they're going to have ups and downs like everybody else.''

Risk in perspective

But he wants to put the issue of headwinds and risk into perspective.

"When JP Morgan first started doing business, it was around the time of the American civil war in the 1860s - a very tough time - and this is important to remember. I tell people about a risk committee meeting we were holding, when the committee started to run through potential risks to our business. The more they said in the meeting, the more risks they identified and it got to a point where we'd want to pull back and not do anything else because everywhere and everything meant we could lose!

"I finally told everyone to stop and asked them to imagine having a risk committee meeting in Europe in 1865 when John Pierpont Morgan was sent by his father Junius to the US. The US had started to industrialise and money from continental Europe was going into railroads, steel, coal and urbanisation. However, if there was a risk committee meeting then they may have said: 'Hey, young JP, they have a civil war over there, who knows if they're going to survive. The pollution is terrible - and look at what's going on with the politics. So whatever you do, don't take too much risk in the United States.' "

"If he had taken that advice, we'd have missed the best 100 to 150 years ever. So you have to be very, very careful when overreacting in business to risks. Of course, you can't run a business that is engaged in risky activities by their nature and not keep a very close eye on it, but as I tell my board, if we're wrong about something, this is the consequence. We may be wrong sometimes, but we'll be okay.

"So, no matter what happens anywhere, JPMorgan Chase will survive. We don't take risk in any one area that could make us fail - and we've operated like this well before stress testing was introduced. You can take the worst-case scenario in China and we'll be fine. Don't get me wrong, it will hurt - it might be a bad quarter or two, or a year - but we'll be ok."

Nor does he view the rise of fintech as a headwind for traditional banks. "Technology is a constant," he says. "It's been there my whole life - digitisation, computerisation, big data power, all of that. We have to use technology to do a better job for our clients - that's our job."

He acknowledges that fintech is particularly good in some areas - reducing pain points for customers and providing cheaper solutions - though not always; for example, money transfers by PayPal are more expensive; PayPal scores on convenience, but not on economics.

But banks are also doing a lot of what fintech companies do, he points out. "They use big data to do underwriting, so do we. They use internet to serve clients, so do we. We just added P2P (person-to-person) banking, real time. I can give you Robo-investing for free if you're my client - there's nothing magical about Robo-investing in itself. I can give you online trading for free. There are a lot of things we can do for our clients for free."

"So it's not like we're sitting ducks. We spend US$9 billion a year on technology. We have 40,000 technologists, including 15,000-20,000 programmers and engineers, who are building new things all the time. We study and analyse fintech companies and we're willing to partner, collaborate or compete with them."

One of the realities banks have been struggling against over since the crisis is near-zero and, in some places, negative, interest rates. Does he think eight years of ultra-low interest rates have worked?

"We don't know," he says. "You can make a coherent argument that they worked. My view is that they were not a good idea - not because the central banks were wrong, but because in some ways, monetary policies are making up for fiscal and regulatory policies and infrastructure investments. So to that extent, they may have been a mistake.

"I also don't think we fully understand the consequences of negative rates on peoples' psyche around investing and retiring. Economic models say that reducing interest rates by 25 basis points when rates are positive is the same thing as reducing interest rates from zero to negative 25 - I don't believe they are.

"So I don't think negative rates have worked very well. Some very smart people say they made things better than they would otherwise have been. That's why it's hard to answer the question. We don't know the counterfactual.''

We turn to discussing the public sentiment towards banks - especially big banks like JPMorgan Chase - which he admits "got clobbered" during the financial crisis. Mr Dimon himself has clashed with some of the more outspoken critics of Wall Street, such as Senator Elizabeth Warren, who led the congressional oversight panel for the US government's bailout of the financial system in 2008 and who has called for tighter regulation on banks - against which Mr Dimon has pushed back.

He suggests that the public sentiment toward banks has been "clawing its way back". "The public perception of banks may be above Congress now, I suppose," he adds, with a wry smile "although generically, banks are still, globally, under the gun".

But what matters most for him is what clients think. "Our clients like us," he points out. "We do business with 15 million American households and customer satisfaction has never been higher. Our commercial banking clients, our SME clients, our global clients - they all like us.''

While he understands some of the public anger toward banks and acknowledges that banks "can make mistakes", he finds the broad-brush criticism of Wall Street misplaced. "What do you mean by Wall Street?" he asks. "Every investor? All the people who do business there? Commmercial banks? Corporate banks? Investment banks? "Do they (the critics) mean we're not supposed to raise debt for clients, that we're not supposed to help GE in India? Or we're not supposed to help Singapore Airlines? We're here for our clients.''

A long innings goes on

Mr Dimon has been at the helm of JPMorgan Chase for 12 years, which makes him the longest serving CEO of a major global bank. He has had health issues - he was diagnosed with throat cancer in 2014, but was successfully treated. But he remains excited about what he does.

"I don't see myself as a professional manager," he says. "I live and breathe this company. I wear the jersey every day. It's not about the money, it's about making this company the best it can be."

What will he do when he calls it a day?

"I'm not going to retire - I don't play golf," he says. "It'll be a portfolio of things. Like, I'm not on a public company board, I'll do that one day. I'm not on a charitable board, I might do that if I can be helpful to them. I'd love to teach. I very well might write a book about what I've been through. And I'll participate in big things and small things, like fintech, with friends and people I like. If I can help my government, I will. I'm very patriotic and I'd love the US do a better job. I'd have a full and happy life."

So is he thinking about life after JPMorgan Chase? "Not yet,"he says. "I hope to be here for awhile."


JAMES "JAMIE" DIMON

Chairman, President & CEO, JPMorgan Chase & Co

Born March 13, 1956, New York City, New York, US

Education:

1978 BA Tufts University

1982 MBA, Harvard

Career highlights:

1982-85 Vice-president, American Express Co

1986-91 Executive vice-president (subsequently President) & CFO, Commercial Credit Group

1991-93 President & CFO, Primerica Corp

1993-97 COO, subsequently Chairman & CEO, Smith Barney

1997-1998 Co-chairman & co-CEO, Salomon Smith Barney Holdings

1998 March 2000 President, Citigroup

March 2000-July 2004 President & CEO, Bank One (merged with JPMorgan Chase in July 2004)

Dec 31, 2005 CEO & President, JPMorgan Chase & Co

Dec 31, 2006 Chairman of the Board, JPMorgan Chase & Co