Analysis: JPMorgan's lukewarm results put Dimon under more pressure

Sat Apr 13, 2013 12:11am EDT
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By David Henry and Dan Wilchins

NEW YORK (Reuters) - JPMorgan Chase & Co Chairman and CEO Jamie Dimon, who came through the financial crisis relatively unscathed, is suddenly looking a little less secure.

The top U.S. bank by assets reported tepid first-quarter results on Friday. Income in its biggest businesses - investment banking and consumer lending - fell, excluding accounting adjustments. Outstanding loans grew by just 1 percent, and profit margins on lending narrowed. Stock and bond trading revenue fell.

Every bank chief executive suffers from similar headwinds, but Dimon is also facing a shareholder vote next month at JPMorgan's annual meeting that could push the board to strip him of his chairman's role. A group of investors behind the proposal says the bank needs to separate the roles of chairman and CEO so that the board can provide more oversight of management.

That follows a similar proposal in 2012 and comes after the bank posted $6.2 billion of derivatives losses last year that came to be known as the "London whale" trades. The losses were recorded by an investment office whose head reported to Dimon.

JPMorgan's stock has lost some of the premium valuation it used to enjoy over the shares of other big banks.

Worse still for Dimon, the bank's relationship with regulators has deteriorated in recent years, and JPMorgan's board blames that in part on the CEO, two sources familiar with the matter said.

"If the board wants to send a message that they want to restore regulatory confidence in the company, it will name an independent chairman," said Michael Garland, who oversees corporate governance for New York City Comptroller John Liu, one of the pension fund investors backing the shareholder proposal.

Garland said the trading loss showed that Dimon needed better oversight from his board of directors.   Continued...

JPMorgan Chase & Co CEO Jamie Dimon testifies before the House Financial Services hearing on "Examining Bank Supervision and Risk Management in Light of JPMorgan Chase's Trading Loss" on Capitol Hill in Washington June 19, 2012. REUTERS/Yuri Gripas