MELBOURNE (Reuters Breakingviews) - JPMorgan’s succession plan is getting an unexpected trial run. Chairman and Chief Executive Jamie Dimon is recuperating after emergency heart surgery on Thursday. How well his deputies manage the virus crisis will provide investors with a glimpse into the bank’s future.
Dimon, 63, is “awake, alert and recovering well” after suffering a tear in his aorta, according to an internal memo released by the $350 billion bank. It deserves credit for quickly disclosing his condition and being upfront about who’s in charge: Other companies have been notably less forthcoming about health matters involving their captains. JPMorgan was unlucky enough to have a practice run in 2014, when Dimon was diagnosed with throat cancer, which he overcame.
It helps that long-standing lieutenants are ready to step in. Daniel Pinto and Gordon Smith, the co-presidents and co-chief operating officers, are familiar faces to clients. The former also oversees JPMorgan’s investment bank and the latter runs its giant consumer operation. They are not alone in the race to eventually replace Dimon. Marianne Lake, the head of consumer lending, Chief Financial Officer Jennifer Piepszak and Mary Callahan Erdoes, the CEO of asset and wealth management, are also in the mix.
None of them will be able to fill the statesman-like role that Dimon plays. That’s also not what JPMorgan needs right away. The biggest priority for the top brass will be to reassure employees, customers and shareholders that even with Dimon sidelined, the success he has spearheaded can be continued in his absence, however short or long that may be.
Pulling together is even more essential given challenging circumstances. The coronavirus that started in China is spreading quickly around the world, weighing on economic growth. Central banks have slashed interest rates, in turn hurting prospects for bank earnings. Capital markets activity is also likely to slow. JPMorgan has lost 17% of its market value in the last month.
Allowing Dimon to occupy both the chairman and CEO roles adds to the challenge. It will be up to lead director and former Exxon Mobil boss Lee Raymond to help guide the interim leadership team. Just how well JPMorgan’s governance and management handle this tumultuous time will give investors some sense of whether Dimon has properly prepared the institution to function without him.
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