JP Morgan Reshuffles In EU, Braces for ‘no-deal’ Brexit

JP Morgan Reshuffles In EU, Braces for ‘no-deal’ Brexit
September 12, 2018

 

J.P. Morgan Chase & Co. (NYSE: JPM) unveiled its restructuring plans yesterday, which will result in the creation of a unique Wealth Management business in Luxembourg and also improve operational capabilities of its Corporate & Investment Bank – Treasury Services and Custody & Fund Services. JP Morgan has likewise started implementing plans to face the ‘worst case’ Brexit scenario. The stock closed Tuesday’s trading session at $114.43, up 0.63% from the prior close.

 

Restructuring & shifting operation to mainland Europe

As part of the reorganization process, J.P Morgan aims to merge two legal banking entities, resulting in flawless client support for these particular businesses throughout the European Economic Area.

J.P. Morgan International Bank Limited or JPMIB, a London-based bank authorized and overseen by the Prudential Regulation Authority and Financial Conduct Authority, will join forces with J.P. Morgan Bank Luxembourg S.A. or JPMBL, a subsidiary of the JPMorgan Chase & Co. group operating in the European Economic Area.

JPMBL bank is regulated and monitored by the Commission de Surveillance du Secteur Financier. It is also supervised by the European Central Bank.

The intended merger, subject to regulatory and other administrative approvals, is anticipated to be completed at the beginning of 2019.

Following the successful meld, all JPMIB’s assets and liabilities, including related assets, client accounts, and legal agreements, will be transferred to JPMBL, after which JPMIB will be dissolved.

The American investment bank is preparing itself to offset risks related to ‘no-deal’ Brexit in the interim.

JP Morgan has cautioned that 4,000 jobs could be shifted out of the UK, leaning on the outcome of Brexit negotiations, and revealed it is presently in ‘full execution mode’ of its strategy for a ‘worst case scenario’ Brexit.

Mark Garvin, vice chairman of JP Morgan, informed the UK MPs that the investment firm’s Brexit plans are in the advanced’ stage and few of their initiatives had already crossed a ‘point of no return.’

His comments have come at a time when investors have started accusing banks of postponing their Brexit preparations to minimize expenses.

On querying the migration of 4,000 of its 16,000 UK jobs, Garvin replied: ‘The evolution of our staff count and of our activities will be very much a function of the ultimate deal that is secured. There is clearly a scenario where actually one does envisage that kind of outcome.”

Garvin asserted this was a development that could be ‘mitigated by a series of arrangements.’

Notably, the chiefs of Citi and Barclays echoed Garvin’s comments and all three all three managers revealed that they were getting ready for a no-deal scenario, but hoped the UK would reach a trade deal with the EU. JP Morgan’s reorganization and preparation for a ‘no-deal’ Brexit scenario is expected to improve the performance of the financial institution in the long-term.

Technically, the stock is trading above its 50-day moving average. Furthermore, the ultimate oscillator has crossed above the reading of 50 and uptrend in the stock can, therefore, be expected.

JPM - technical analysis - 12th September 2018

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Andrew Wright

Prior to founding tradersasset.com in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.


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