JPMorgan Chase & Co. (NYSE: JPM) is executing a management shake up in follow-up to the London Whale trading debacle. Chief Executive Officer Jamie Dimon reshuffled managers just below him, signaling that the biggest U.S. bank is preparing for life after its famed boss.
The moves come two weeks after JPMorgan said it had lost nearly $6 billion from bad derivatives trades on corporate debt, representing a huge black eye for a chief executive long praised for his risk-management skills. Due to the changes, a number of senior positions will be jointly held by two executives. The shared responsibility is a response to the losses from the chief investment office, and designed to improve safe guards and controls on oversight. “What happened in the CIO office was that there weren’t enough people taking a close-enough look,” said Richard Bove, an equities analyst at Rochdale Securities. “That was a lesson for every division in the company.”
Dimon has said he likes to move promising executives around to give them experience in different parts of the bank, a management philosophy popularized by General Electric Co. Mike Cavanagh, 46, and Daniel Pinto, 49, will become co-CEOs of the Corporate & Investment Bank. Cavanagh, who was once chief financial officer for the bank and is now head of Treasury and Securities Services, will oversee lending and investment banking businesses such as merger advisory. Pinto, who heads the bank’s business in Europe, the Middle East and Africa as well as its global fixed-income business, will oversee all trading businesses.
Cavanagh is a longtime protégé of Dimon. When Dimon was president of Citigroup (NYSE: C), Cavanagh was chief administrative officer. In 2000, Cavanagh followed Dimon to help revive Banc One Corp as head of strategy and planning when Dimon became the bank’s CEO. When JPMorgan Chase bought the Chicago bank in 2004, Dimon became chief operating officer and Cavanagh was chief financial officer, a key position of influence with investors and Wall Street. Two years ago, Dimon shifted Cavanagh to run the division that sells cash management and securities custody services to corporations, and three months ago he deputized his deputy to lead the autopsy of the problems at the CIO. “Jamie usually gives Cavanagh jobs heavy on management and strategy,” a former JP Morgan executive said.
While Cavanagh’s star is rising, Staley’s seems to be diminishing. Once seen as a potential successor to Dimon, seems to have been pushed aside, analysts said. Staley, a 23-year veteran who began his career at Morgan Guaranty Trust Co, is taking a new position as chairman of the corporation and investment bank, a title that on Wall Street often signals an ambassadorial role with clients.