- Last Updated: 11:46 PM, July 8, 2012
- Posted: 10:11 PM, July 7, 2012
Jamie Dimon is trying to get back the swagger that made him Wall Street’s star banker. It all comes down to Friday, when the JPMorgan Chase CEO informs the Street and perturbed investors of his latest quarterly earnings.
And there will be earnings — perhaps record earnings for the full year, despite the most recent estimates of a trading loss of between $4 billion and $6 billion from the London Whale debacle.
That’s because Dimon, 56, is making sure other asset sales will bolster the bruised balance sheet — and help him weather his fiercest challenge as chief executive since the crash of 2008.
The bank’s stock price is down more than 21 percent since Dimon referred to the London hedging losses as “a tempest in a teapot” in late April.
One of Dimon’s closest associates, head of the so-called Chief Investment Office (which oversaw the hefty trading losses), Ina Drew, was compelled to leave the firm, ending a three-decade tenure.
A longtime acolyte since Dimon was leading Chicago-based Bank One, Drew also could see some of her roughly $16 million pay package clawed back by the bank’s board.
Managing complicated banking situations isn’t new to Dimon, who cut his teeth under the tutelage of bank honcho and former Citigroup boss Sandy Weill.
Banking was in Dimon’s DNA. His Greek grandfather Panos Papademetriou — who later changed the family name to Dimon to get work, according to “Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase” by Duff McDonald — earned a job at the Bank of Athens. His father, Ted, is a longtime stockbroker who worked for Weill as well. Ted Dimon joined JPMorgan Chase in 2009.
Good looks and a take-charge attitude earned Dimon the attention of Weill, with whom he worked as a No. 2 for years until the pair had a very public falling-out over who would control Citigroup.
On the London trade Dimon said, “We made a mistake. I am absolutely responsible,” he said during a Senate hearing discussing the trading loss three weeks ago. “The buck stops with me.”
Dimon’s bluntness and his responsibility-taking disarmed many of his angriest critics in Congress.
This blow has tried Dimon’s mettle, sources said, even more than did the 2008 financial Armageddon that witnessed JPMorgan scooping up Bear Stearns and later consumer-banking rival Washington Mutual.
Some of Dimon’s closest lieutenants, including Mary Erdoes, head of JPMorgan’s asset management unit, and rainmaker Jimmy Lee, encouraged Dimon to conduct a series of meetings with clients and with Microsoft officials as the trading disaster was unfolding.
Dimon delivered his own dictum to executives throughout the firm that they need to be straightforward and transparent about the losses and the firm’s game plan in dealing with its troubles.
“I’m going to be judging a lot of you later based on how you perform [during this crisis],” sources said that he told employees during the days leading up to the bank’s uncovering of the details of the losses.
In the end, sources said, Dimon sees the trading problem as a teachable moment, noting that the bank may have been getting “too cocky, too confident.”
The trading fumble also forced Dimon to be much more transparent about the bank’s activities and to do some soul-searching himself.
JPMorgan is slated to host an unusual morning meeting on Friday that analysts and shareholders can attend, to discuss results at its Midtown Manhattan headquarters at 270 Park Ave, which is not common for quarterly reports.
Dimon is hoping to deliver second-quarter profits of about $4 billion for the firm, sources said.
The bank is expected to offset much of its potential balance-sheet hit by selling billions in other assets and securities.
JPMorgan has already used $1 billion to offset its initial losses in its CIO division is expected to benefit from an esoteric accounting rule, known as debt value adjustment, that allows it to take profits when the value of its debt falls.
Consensus estimates peg JPMorgan’s second-quarter profits at 79 cents or nearly $3.1 billion — a roughly 43 percent decline in the bank’s profits compared to net income of $5.4 billion in the second quarter of 2011.
1982: After graduating Harvard Business School, Dimon goes to work for Sandy Weill at American Express, where his father, Theodore, is a VP.
1985: Dimon follows his mentor Weill to Commercial Credit, a small consumer-credit firm, to become CFO.
1998: Through frantic M&A activity, Dimon and Weill create Citigroup out of the small finance company. Dimon is fired later that year by Weill.
2000: Dimon is named CEOof BankOne.
2004: JPMorgan buys BankOne and names Dimon president and COO.
2005: Dimon is appointed CEO.
2006: Dimon adds chairman title.
2011: Dimon receives $23M pay package, the highest salary of any banker.