There has been talk in Wall Street that JPMorgan Chase & Co. (NYSE:JPM) should split itself into pieces, suggestions that Vining Sparks’ Marty Mosby refuted during an interview on CNBC. The analyst believes any economy in the world needs a bank of JPMorgan nature in terms of complexity and caliber to operate effectively.
Debate on a possible split up was fuelled last week when it emerged JPMorgan Chase & Co. (NYSE:JPM) may be worth more, in pieces and that a split would unlock any hidden value.
“It is a complex global banking organization, however; there is a need for that, in every economy, JPMorgan Chase & Co. (NYSE:JPM) serves that need and that niche in this economy. In the U.S., the economy is better off for having JPMorgan here to participate and help the companies interact internationally as well. So we don’t think breaking up is that right answer. There is a lot of synergies both from revenue and expenses, we just need to make sure it is safe and sound,” said Mr. Mosby
Legal costs continue to be the biggest headwind engulfing most of the big financial institution, of JPMorgan Chase & Co. (NYSE:JPM) caliber. The debate comes in the wake of the bank announcing that its legal costs and expenses for the fourth quarter soared to a high of $1.1 billion up from $847 million the past year.
Mosby is of the opinion that JPMorgan Chase & Co. (NYSE:JPM) is slowly picking itself from the effects of the financial crisis and that improvements in terms of low legal costs should start to be seen as early as 2016. Regulators in the wake of the financial crisis moved to stem their authority in the financial sector especially in the way banks operate, seen as one of the measures of averting another financial crisis
Large-cap banks according to Mosby are already positioning themselves for the possibility of an increase in short-term interest rates later in the year. A move that is expected to make the financial sector more secure.
“I think we have accomplished like we said the safety and soundness, we’ve increased capital levels, we’ve increased liquidity, and we’ve increased our control on risks of all types. That’s what was really important. So we have a fairly star worth industry here that can withstand a pretty strong storm,” said Mr. Mosby.
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