NEW YORK CITY-Continuing the trend of financial firms cutting back, J.P. Morgan Chase announced Tuesday that it will reduce its headcount by 17,000 people by the end of 2014. Among those cuts, 13,000 to 15,000 will be in mortgage banking, with the remainder of the job eliminations taking place in the consumer banking segment.
The move will have a “minimal impact” on New York as the mortgage business is headquartered elsewhere and the consumer cuts will take place nationwide, spokeswoman Amy Bonitatibus tells GlobeSt.com.
J.P. Morgan Chase is making the reductions because of changing needs in the marketplace, according to Bonitatibus. “The bulk of the reductions are in mortgage banking because fewer home owners are falling behind on their mortgages so we need fewer employees to assist those who are struggling. The market has normalized and we need to do that too.”
Other published reports paint a different picture though. Crain’s New York Business reports that the banking giant made the cuts in an effort to lower expenses, especially at a time when it was going strong on the income front. Mortgage profits that have driven earnings may decline this year, the paper says, as rising competition leads banks to offer nearly all-time low interest rates on loans. Financial firms also are consolidating, the paper says, because they reached a settlement with US regulators that ended the need for the companies to review foreclosure documents.”
The company also may be looking to lower expenses after seeing a solid performance in net income, which has reached record levels, according to Crain’s. CEO Jamie Dimon professed in an online presentation on the firings that expenses are “an important focus area for us.”
Meanwhile, those who don’t face the chopping block can rest easy about their salaries and bonuses, according to Crain’s. Investment banking compensation is “expected to remain relatively consistent,” J.P. Morgan says in an online presentation on the cuts, reports Crain’s.