“JPMorgan Chase became the latest Wall Street firm to scale back in an uncertain economy, announcing plans Tuesday to save $1 billion through various costs cuts and about 4,000 job reductions.
The bank, struggling to emerge from the shadow of a trading scandal known as the “London Whale” affair that dealt the firm ts biggest ever trading loss, also issued a stark warning about the rising costs of regulation.
A frequent critic of efforts to increase oversight on Wall Street, JPMorgan said that new red tape could cost up to 10 percent of market revenues. However, the financial services giant cautioned that the effects of the Volker Rule won’t be seen for at least two to three years. JPMorgan also said it plans to add 200 more branches by 2014.
The bank stated it would reduce headcount in its mortgage banking unit by between 13,000 to 15,000 by the end of 2014. Most of these employees are considered contractual and hourly workers, and not full-time, the bank said.
“The biggest challenges we face are from regulatory issues,” said Marianne Lake, JPMorgan’s CFO, speaking at CNBC’s Global CFO Council. She added that the planned cuts would be driven by savings in its mortgage unit, during a period when the U.S. housing sector has shown fairly steady improvement from the post- 2008 meltdown.
JPMorgan’s cost-saving efforts come at a time when its key rivals are also moving to adjust to a volatile global economy. Goldman Sachs is reportedly preparing a round of job cuts; meanwhile, beleaguered financial behemothCitigroupannounced its own massive restructuring plans last year…..”
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