JPMorgan Chase & Co. (JPM:US) Chief Executive Officer Jamie Dimon stepped down as chairman of the lender’s main bank subsidiary at the start of July, according to a person briefed on the move.
Dimon, who serves as CEO and chairman of the parent company, handed off his post at the unit to William C. Weldon, a JPMorgan board member and former head of Johnson & Johnson (JNJ:US), said the person, who asked not to be named because details of the move weren’t announced. A regulatory document released yesterday listed Dimon as “chairman emeritus” of the subsidiary, which runs JPMorgan’s deposit and consumer banking operations.
JPMorgan has sought to bolster corporate governance and rebuild its relationship with watchdogs after probes by regulators and a Senate panel faulted the firm for withholding information from U.S. overseers during trading losses last year. Dimon handed off the chairman title at the unit after company attorneys recommended it for technical reasons, rather than because of pressure from regulators or investors, said the person, who’s familiar with the bank’s thinking.
Joe Evangelisti, a company spokesman, declined to comment. Dimon’s status as chairman emeritus at the unit was disclosed in JPMorgan’s annual “living will,” describing to regulators how the New York-based firm could be wound down in an emergency.
Dimon, 57, won shareholder backing in a May vote to keep his dual CEO and chairman titles at the parent company, defeating a push by investor advisory firms to split the roles in the wake of last year’s $6.2 billion trading loss. While the board endorsed his leadership during that fight, it cut his pay for 2012 in half after finding he had some responsibility for lapses that led to the trading losses.
Last month, the bank paid $920 million to settle U.S. and U.K. probes of the botched bets at its chief investment office in London. The company admitted violating securities laws in a settlement with the Securities and Exchange Commission.
The bank unit, JPMorgan Chase Bank NA, had a rating of its management downgraded in July 2012 by the Office of the Comptroller of the Currency, according to a March report by the Senate Permanent Subcommittee on Investigations. The OCC cited “lax governance and oversight in the chief investment office,” according to the report.
Management effectiveness is one of six components in the firm’s so-called Camels rating, a confidential measure the OCC uses to monitor banks’ safety and soundness. The grading system, using a 1-to-5 scale, also tracks capital, asset quality, earnings, liquidity and sensitivity to market risk.
The March Senate report didn’t specify JPMorgan’s rating at the time. The management grade was lowered to 3 from 2, the Wall Street Journal reported that month, citing unidentified people familiar with the assessment. The newspaper reported on Dimon giving up the unit chairmanship yesterday.
The OCC is the primary regulator of the national bank while the Federal Reserve oversees the parent company.
JPMorgan increased spending on internal controls by about $1 billion this year and dedicated more than $750 million “to address several of our consent orders” with regulators, Dimon wrote in a memo to employees last month. At least 5,000 people at the company have been assigned to compliance, he said.
“We have re-prioritized our major projects and initiatives, deployed massive new resources and refocused critical managerial time on this effort,” he wrote at the time.
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