JPMorgan Chase has made more than 30 acquisitions in 2021, and the U.S. bank with the largest assets is expected to usher in the largest acquisition frenzy in years.
These acquisitions are mainly acquisitions of smaller companies, from online money management companies in the UK to digital banks in Brazil, which shows that JPMorgan Chase CEO Jamie Dimon is turning to deals to grow the banking giant.
Part of the bank’s core business is in trouble due to low interest rates and faces greater competition from fintech companies and unregulated lenders.
Dimon Marked last year JPMorgan Chase will be “more active in full-scale acquisitions.”
According to data from Refinitiv, the bank has completed 33 transactions so far in 2021, one less than the total number of transactions in 2019. The prices of most transactions are not publicly disclosed.
Nine of these transactions occurred in June, including two last week: the acquisition of OpenInvest, a platform that allows customers to customize investment portfolios based on environmental, social, and governance indicators, and a minority stake in Brazilian digital bank C6.
This follows its Acquire nutmeg, A UK digital wealth management platform, valued at approximately US$700 million, and Campbell Global, a forest management and woodland investment company.
In March of this year, JPMorgan Chase also acquired a 10% stake in the wealth management business of China Merchants Bank for approximately US$410 million.
Wells Fargo analyst Mike Mayo said: “Compared with large acquisitions, they acquire smaller financial technology companies and better promote the asset management business with lower cultural, operational and goodwill barriers. It’s a series of pearl methods.”
Mayo added that JPMorgan Chase can use its vast network to take advantage of these smaller companies. “The key word here is scalability and how they connect and leverage these transactions with existing business and retail customers.”
Analysts said the bank has also turned to transactions in response to investors’ increasing demand for ESG risks and customers seeking digital banking and asset management services.
Edward Jones analyst James Shanahan said: “The focus seems to be on companies that can support JPMorgan’s digital strategy, or companies that can give the company an advantage in the fast-growing ESG investment field.”
For Dimon, who has led JPMorgan Chase since 2005, this transaction marks his return to the roots of Wall Street, where he served as Sandy Weir’s chief lieutenant. Series of acquisitions This led to the establishment of Citigroup.
The emphasis on making smaller acquisitions also highlights JPMorgan’s obstacles to larger deals for rival banks, which would violate deposit regulatory ceilings.
One area where JPMorgan Chase has expressed willingness to conduct larger transactions is asset management.bank Lost Last year, Morgan Stanley was in a bidding war to acquire US investment manager Eaton Vance for $7 billion.
JPMorgan Chase’s acquisition of OpenInvest is also the latest attempt by an established company to expand into the field of personalized investment services.When Morgan Stanley acquired Eaton Vance last year, it gained control of the direct indexing platform Parametric, and BlackRock acquires Aperio, Another direct index risk, November.
JP Morgan Chase’s asset management business “performed well, and for active managers, their net flow is good [but] They lack a passive presence and lag behind BlackRock, Pioneers and State Street,” Mayo said.
In the end, these transactions represent an attempt to find sources of income outside of traditional banking services-imperative Speech by Dimon At a meeting in June.
“I think the banking system will be very difficult. This is my personal view. There will be winners, but not everyone,” Dimon said.
When asked if JPMorgan Chase would win, Dimon replied: “We will do whatever it takes. So please help us, God.”