JPMorgan Chase’s roots date back to the 1799 founding of the Bank of The Manhattan Co., which financed a water-delivery system whose pipes are the inspiration for the Chase logo today. Over time the bank evolved into a global financial institution with $4 trillion in assets doing business in 66 countries.
CEO Jamie Dimon worries the bank’s overseas business is under threat now that the U.S. government has declared a global trade war.
“I honestly add that to the list of worries,” Dimon said on an earnings call Friday. “We will be in the crosshairs.”
JPMorgan holds about $500 billion in non-U.S. deposits, about a fifth of the bank’s total. Losing some of those deposits to a rival global bank, such as UBS or HSBC, would only require the click of a mouse.
“I do think some clients or some countries will feel differently about American banks,” Dimon said, “and we’ll just have to deal with that.”
Meanwhile, there is the matter of how far the U.S. economy will slow in the months ahead as the cost of tariffs works its way through supply chains. Dimon said the economy faces “considerable turbulence” and that to prepare, JPMorgan added $1 billion to loan-loss reserves last quarter. It didn’t add more because consumer spending remains strong and unemployment is still low.
CFO Jeremy Barnum said one factor that’s “supportive” of consumer spending is people are buying stuff now because they expect prices to rise later.
Corporate clients are hunkering down, too, waiting to see if the president really will follow through with his trade war.
“A lot of people are not doing things because of this,” Dimon said.
Dimon’s warning about a recession in an interview with Fox Business News on Wednesday is, along with the sharp increase in Treasury bond yields, credited with forcing President Trump to back down from some of his tariff plans with every nation except China. The CEO urged the White House to make trade agreements quickly.
“The most important thing to me is that the Western world stays together economically…and militarily to keep the world safe and free for democracy. That is the most important thing. I really almost don’t care fundamentally about what the economy does in the next two quarters,” he said. “That isn’t that important, and we’ll get through that. We’ve had recessions before.”
