Coronavirus and investment banking: Dimon shines while Solomon stumbles
JPMorgan chief executive Jamie Dimon has had a good start to the Covid-19 crisis, while his Goldman Sachs counterpart David Solomon is faltering.
Jamie Dimon, CEO of JPMorgan
Jamie Dimon changed the format of his annual shareholder letter, which was published on Monday, to focus on the challenges of the coronavirus crisis.
He made the uncontroversial statement that the minimum that can be expected is a bad recession and financial stress comparable to the credit crisis of 2008, before raising the possibility that JPMorgan will suspend its dividend.
Dimon said this could occur under an “extremely adverse scenario” that features a 35% drop in US GDP and a 14% unemployment rate.
Dimon, who likes to highlight the strength of his bank’s balance sheet in good times as well as bad, maintained that even under this scenario JPMorgan would finish the year with strong liquidity and common equity tier-1 capital of $170 billion, for a regulatory capital ratio of 9.5%.
He nevertheless raised the possibility that JPMorgan would follow European banks in halting payments to shareholders.
“If the board suspended the dividend, it would be out of extreme prudence and based upon continued uncertainty over what the next few years will bring,” he said.