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JPMorgan Chase seeks a way out of underperformance

At the end of last month, William Harrison, chairman and chief executive of JPMorgan Chase, announced sweeping changes to the senior management of the group's investment banking division.

This follows 18 months of hard struggle to wring decent financial and stock market returns from the merger of JP Morgan and Chase. High credit costs, private-equity losses and weak investment banking revenues have dogged the newly combined firm. The institution that set out to establish itself as a new breed of global super-bank at the start of 2001 ended the year with an anaemic cash operating return on equity of just 10%.

Morale at the firm is low, with large numbers of bankers laid off and many more choosing to walk out. Investors have become restive, muttering that Harrison's credibility and job may be on the line.

On May 23, Harrison acted. Out went former investment banking co-heads Geoffrey Boisi and Donald Layton, but in very different ways. Boisi, a long-term adviser to Harrison and his predecessor, Walter Shipley, and one of the architects of the merger between Chase and JP Morgan, is leaving the firm. Boisi joined Chase in May 2000 when Harrison paid $500 million to buy his boutique, the Beacon Group.

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