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Can Jamie Dimon save Bank One? That's the question facing the nation's
fourth-largest bank, which recently hired the former Citigroup Inc.
president as its chairman and chief executive officer. When the
appointment was announced on Mar. 27, the Street's immediate reaction
was favorable. The conventional wisdom is that Dimon has a long row to hoe but that he's a good choice as Bank One's top dog.
One notable dissenter is Dale Jacobs, who runs Financial Investors, a money-management firm in New York City that specializes in bank and financial stocks. This veteran bank-watcher has taken a short position in Bank One stock, on the theory that Dimon is far from the best exec for the job. "Bank One has got some very significant structural problems, and they're going to be hard to overcome for anyone" -- particularly Dimon -- in Jacobs' view.
To be sure, Jacobs acknowledges that Dimon has a solid reputation in
financial circles and has certainly boosted investor morale. But this pro isn't very bullish on Dimon as an administrator, at least, not at Bank One.
BUILT BY ACQUISITIONS.
Why would Dimon be a bad match for Bank One? First of all, he gained prominence as a dealmaker, and it's no secret that this is his strong suit. Indeed, in its statement announcing Dimon's appointment, Bank One noted the new chief's record at the old Commercial Credit Co., pointing out that under him, Commercial Credit (later renamed Primerica) "was completely restructured and made numerous acquisitions and divestitures, substantially improving its profitability." Dimon has said he would like to improve Bank One's profitability through acquisitions.
But in Jacobs' view, the last thing Bank One needs right now is a
dealmaker. "That skill set won't be needed for some time soon," he says. Jacobs feels that Bank One needs to integrate its far-flung operations, not expand, and that dealmaking should be on the back burner. "A dealmaker is a different personality than a leader," says Jacobs. "What Bank One needs is...a leader who can mobilize the executive core." Jacobs has strong doubts that administration is Dimon's strongest attribute.
When he left Citi, critics said that under his leadership, Citi wasn't able to integrate some of the major banking functions at that sprawling institution. And that's pretty much one of the major challenges facing Dimon at Bank One -- to turn it into a smoothly running megabank.
INSENSITIVE.
Dimon has already raised bank investors' hackles by making remarks, in one recent conference call with analysts, that some analysts interpreted as questioning the dividend. Jacobs believes the statement shows that Dimon may not be as sensitive as he should be to market sentiment. Even a hint of cutting the dividend, in the banking world, is a mighty strong negative message to send to the investment community, he notes.
One major problem facing Bank One is its First USA credit-card
operation, which hurt its parent's earnings big-time in 1999. What will Dimon do to breathe new life into that troubled business line? That's one of the questions the exec will have to answer. Not as glamorous as making a deal. But for Bank One, a heck of a lot more vital.
Senior Writer Weiss covers finance for Business Week magazine and is filling in for Gene Marcial this week
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