JP Morgan Plans to Cut 19000 Jobs in its Mortgage and Community Units
The biggest bank in the United States, JPMorgan Chase & Co. says that it would be eliminating almost 19,000 jobs in its mortgages and community banking division by 2014. This seems to be one of the mean steps taken by CEO Jamie Dimon for cutting expenses.
As of December 2012, the biggest U.S. bank had over a quarter of a million employees. The bank would be cutting up to 15,000 jobs in the mortgage division and around 4,000 jobs in the community banking division until the end of 2014. According to spokeswoman, Kristin Lemkau, around 4,000 people would be leaving the company this year.
The CEO is currently focused on reducing expenses after increasing the bank’s net income to new records for the past 3 years. Last year, earnings of banks were driven by mortgage profits, but it is expected it could fade away because of the increase in competition that would keep the loan rates low.
According to a bank analyst from New York, Chris Kotowski as credit quality stabilizes, banks can again start focusing on increasing their core efficiency. It is when credit issues grow that banks have to spend money at those problems. Operational efficiency becomes the focus when everything normalizes.
Citigroup, the third largest bank in the U.S., says that mortgage banking costs would come down by around $3 billion through the end of next year. Community banking costs, excluding home lending, are expected to grow by around 3% in 2013 and by 2% in 2014 with the expansion of business. The company is planning to cut jobs in its same-store settings by 20% through 2015.
CEO-Consumer Banking, Ryan McInerney says that the company expects to increase its efficiency through attrition, the same way it did in 2012. In December, the company had announced its intentions of cutting 11,000 jobs, with more than 75% of the cuts taking place in its consumer banking and institutional clients division. In 2012, the lender cut over 7,000 jobs in its goal to reduce expenses and increase profits.
Similarly, Bank of America had also announced last year that the bank would be cutting around 30,000 jobs through 2015. In addition, the second largest U.S. bank would also reduce its annual expenses by $8 billion every year through 2015.
JPMorgan is trying to reduce its mortgage service expenses while resolving regulator investigations and offers borrower relief along with home loan changes. Last month, the bank discharged over 800 employers working on foreclosure reviews.
According to the publisher of an industry publication in Bethesda, most of the job cuts in JPMorgan are expected to take place in its servicing division. Servicing operations were extended by banks in the first place to deal with the burden during the housing crisis. The publisher added that the positions to be cut are not comparative to the high-paying posts in the investment banking division.