Jamie Dimon said no bank branch closed without his permission after rival boasted of stealing JPMorgan’s leases and customers

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Jamie Dimon said no bank branch closed without his permission after rival boasted of stealing JPMorgan’s leases and customers

When Jamie Dimon was backstage at a conference and heard a competitor bragging about taking over JPMorgan’s old branch leases and stealing customers, he vowed it would never happen again.

That’s why the CEO of America’s largest bank decided, at one point, to personally approve or veto every branch closure to ensure the institution wouldn’t do so. lose more customers to rivals.

In conversation at the AllianceBernstein Strategic Decisions Conference this week, Dimon said that at a previous Bernstein conference, Vernon Hill, who founded Commerce Bank in the 1970s, bragged about taking over branch leases that JPMorgan had vacated.

“I was in the back listening to Vernon Hill here, and he was doing a slide presentation for all of you,” said Dimon, who has led JPMorgan since 2006. “He was making fun of Chase. (Hill) said, “They closed that branch, I moved in.” They closed that branch, I moved straight in.

“When he was coming down, I said, ‘Vernon, this will never happen again.'”

But this joyous exchange sparked a reaction change at America’s largest bank.

“I put a rule in place at the time that you couldn’t close a branch without my permission,” said Dimon, who was paid $36 million for his work in 2023 – said.

“(Hill) took 100 percent of the consumer business (from those branches). 100 percent. Even though there was a Chase branch a block away (people said), ‘Oh, they’ll just go into the ‘other branch.’ No, they didn’t want this branch.

Dimon, who recently shocked Wall Street by revealing he would step down from CEO role in the next five yearsadmitted that Commerce Bank had “of course” done other things to ensure good service to keep former Chase customers from returning.

The Wall Street veteran did not give the specific year of the trade, but given that Dimon took the CEO seat in 2006 and Hill was ousted in 2007this reduces the delay.

Against a current

In the United States, banks are closing more establishments than they are opening.

A study by S&P Global found that in 2023, a net 1,409 bank branches closed. This is a slowdown in the rate of closures recorded in previous years: 1,854 in 2022 and a record 2,928 in 2021.

JPMorgan Chaseon the other hand, announced in February it was investing several billion dollars in its branches, opening 500 branches and hiring 3,700 additional employees by 2027.

An additional 1,700 Chase branches will be renovated, focusing on penetrating new markets in rural and low-to-moderate income communities.

Dimon rejected the theory that JPMorgan Chase “doubles down” on its banking agencies, saying the company is also “consolidating some.” He admitted that even that he was skeptical.

“When I came to Bank One, they were consolidating — you know, ‘clicks, not bricks,'” said Dimon, who was president and CEO of the institution between 2000 and 2004, when it merged with JPMorgan.

“They were closing branches that were making a million dollar profit a year. They would have made a million dollar profit a year for the last 20 years. What the hell were they thinking?”

The Harvard alumni also offered some advice on the future of branching, perhaps advice for its successor: “Be very analytical about what you’re closing, why you’re closing it, why you can keep it. I could tell you give some very specific examples of times when I stopped to close a branch and they act like I’m intervening I tell them, “I’m not interfering, don’t close this branch” I’m not going to give you. all these examples, I don’t want to tell my competitors why.

“I also said, ‘If you close this branch, you know who’s going to open there? Wintrust. (Capital One) – like tomorrow. (They) will take the lease and move in.’

In addition to ensuring that consumers don’t turn to another lender, JPMorgan is also addressing some of the consumer demands in the era of online banking.

While the American Bankers Association found in 2023 that 71% of 2,211 adults surveyed prefer to bank via app or computer, with a significant proportion wanting their digital banks to have more of a human element.

Nearly four out of 10 consumers, by user experience User testing expertswould like their online bank to have a human available to handle customer complaints.

Likewise, although many consumers enjoy the convenience of online banking, some customers prefer to speak with a teller.

In 2021, the FDIC reported that in-person banking is more prevalent among “low-income households, less-educated households, older households, and households that did not live in a metropolitan area,” which is consistent with orientations defined by the Dimon team. .

This story was originally featured on Fortune.com

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