ANALYSIS - JPMorgan's investment banking gaining on Goldman

By Elinor Comlay

NEW YORK (Reuters) - JPMorgan Chase & Co has snapped up market share for its investment banking unit and, amid the financial crisis, its large balance sheet may put it in a position to threaten Wall Street's dominant investment bank, Goldman Sachs Group Inc.

Analysts largely expect the investment banking unit at the second-largest U.S. bank to again report strong second-quarter results, following record first-quarter revenue.

A retail giant with a reputation for conservative risk-taking, JPMorgan has survived the financial crisis and benefited from its acquisition of near-collapsed investment bank Bear Stearns Cos.

"JPMorgan can compete with, and beat, Goldman Sachs," said Dick Bove, a veteran banking analyst with Rochdale Securities.

With $2.1 trillion in assets, JPMorgan dwarfs Goldman, which has $925 billion, and also Morgan Stanley, the former investment bank traditionally seen as Goldman's closest rival, which has $1.1 trillion.

The strength of its balance sheet could be an advantage, in particular since these banks this month returned billions to the U.S. government's bank bailout fund, known as the Troubled Asset Relief Program.

After TARP, "The cost of capital becomes key, and there JPMorgan has a clear competitive advantage," said George Ball, chairman of wealth and asset manager Sanders Morris Harris Group in Houston.

JPMorgan's size means it can lend more to more clients, giving it a better chance to sell other services, Bove said.