Awards for Excellence 2019
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Editorial: This is the era
of JPMorgan
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| View full 2019 results |
It is a sign of just how far JPMorgan has come in investment banking in the years since the financial crisis that the near obsession of its senior management today is no longer how to build leadership – in some markets they even believe it would be better for the bank if its share went down – but rather how to guard against complacency.
The firm has never looked more powerful than it does today. The gap to second place at the top of the global investment banking revenue rankings is growing wider than ever – close to 100 basis points for full year 2018, when 50bp or so used to separate the leading firms. The gap was 130bp in the first three months of this year.
If you concentrate just on the primary financing businesses, in the first quarter of 2019 JPMorgan’s lead in share of global capital markets revenue was fully 230bp above second-ranked Bank of America Merrill Lynch.
This is not quite dominance. In each segment of the business, it has strong and impressive rivals. But no one else competes at the top in each.
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Daniel Pinto |
“The difference between JPMorgan and everyone else is our scale and how balanced we are,” says Daniel Pinto, chief executive of the corporate and investment bank and co-president and chief operating officer of JPMorgan Chase.
In M&A, it is still second. This is a business where the traditional leaders used to complain that JPMorgan won league table credit only thanks to its balance sheet and willingness to finance. It has no M&A stars, the critics would say, the franchise wins it business.
Maybe. But there are some very sophisticated purchasers of investment banking services giving business to JPMorgan. It heads the rankings for revenue from financial sponsors across M&A advisory, IPOs and financing. As Euromoney went to press, JPMorgan had been named sole adviser to Ireland-based Allergan on the proposed $63 billion cash and stock sale to AbbVie, facing Morgan Stanley on the other side.
At the same time, JPMorgan was, with Credit Suisse and Bank of America, advising Infineon Technologies on the German chipmaker’s $10 billion offer for Silicon Valley-based Cypress Semiconductor.
“It’s a highly strategic, cross-border deal for a European company into the US, in which we are supporting Infineon right in the midst of current trade tensions,” says Viswas Raghavan, chief executive of JPMorgan for Europe, the Middle East and Africa.
But you have to look behind the most visible yardsticks of investment banking success – the revenue and volume rankings in capital markets and advisory – to get a true sense of the firm’s capabilities.
Arguably more impressive than its rise up the primary market and advisory rankings has been its rise in the secondary markets businesses. When other firms pulled back from fixed income, currencies and commodities, JPMorgan continued to invest. It rebuilt its FX business carefully, imaginatively and determinedly, over 12 years from 2006, and this year reconfirmed its top share for customer volume in Euromoney’s annual survey.
There is always some business or some geography where we are not number one and still have work to do – Daniel Pinto
Even more impressive still, it has come from not quite nowhere 10 years ago but certainly far behind the leaders to build an equities trading business across cash, derivatives and prime that now has long-time market champion Morgan Stanley looking nervously over its shoulder.
There may be countries where it is not number-one ranked, but look by region and JPMorgan tops the revenue rankings in the biggest fee pools of the Americas and Europe, although it is not so dominant in Asia.
“There is always some business or some geography where we are not number one and still have work to do,” Pinto admits.
For example, it is looking again at trade finance, a rare business inside the corporate and investment bank where it stands outside the top providers. If it does decide to rethink, competitors should watch out.
JPMorgan wins the world’s best investment bank for 2019 award thanks to long-term strategic decisions taken years ago that the group’s scale, earnings power and discipline have allowed it to fund remorselessly.
And there’s another aspect to this, namely JPMorgan’s determination to build from its previously fragmented payments infrastructure a new integrated whole, through which it can offer new value-added services to large corporate customers, financial institutions and small businesses alike. This is an initiative that also spans the markets businesses.
As Jamie Dimon, chairman and chief executive, told Euromoney in June: “We are not a diversified conglomerate. All our businesses feed each other.”
If Dimon is right, JPMorgan – as the most diversified global wholesale bank – is likely to extend its lead in the years to come.
