NEW YORK (Reuters) – JPMorgan Chase & Co(JPM.N) Chief Executive Jamie Dimon reshuffled his management team, signaling that the biggest U.S. bank is preparing for life after its famed boss leaves.
Analysts said the changes, announced on Friday, put Mike Cavanagh and Daniel Pinto among those in the running to succeed Dimon, 56, when he is ready to retire.
Cavanagh, 46, and Pinto, 49, are perceived as being in the next management generation, analysts said. In the shake-up, they were named co-chiefs of commercial and investment banking.
Matt Zames, 41, named co-chief operating officer, could also be in the running to succeed Dimon, analysts said.
The changes come two weeks after JPMorgan disclosed losses of nearly $6 billion in the first six months of 2012 from bad derivatives trades on corporate debt, a huge black eye for Dimon, a CEO long praised for his risk-management skills.
The shake-up will result in a number of senior positions that are jointly held by two executives, at least temporarily. Analysts said the shared responsibility is likely a response to the trading losses, which came from the bank’s Chief Investment Office.
“What happened in the CIO office was that there weren’t enough people taking a close enough look,” said Richard Bove, an equities analyst at Rochdale Securities. “That was a lesson for every division in the company.”
It is at least the third management reshuffle in as many years for the bank. In a June 2011 shake-up, reporting lines were streamlined. Dimon has said he likes to move promising executives around to give them experience in different parts of the bank, a technique popularized by Jack Welch when he was CEO of General Electric Co.
The shifts can be risky for executives.
Jes Staley, 55, heads JPMorgan’s investment bank and has led its asset management and private banking arms. In the latest reshuffle, he was made chairman of the commercial and investment bank, a new position that on Wall Street often signals a more ambassadorial role rather than a hands-on management job.
READING THE PHOTOS
Analysts scrutinize such executive changes with the intensity that Kremlinologists used to devote to May Day parade photos from Moscow, where the positions of Soviet officials hinted at who was on the way up or down.
Prior shifts at JPMorgan made Cavanagh appear to have dropped in rank, analysts said – he was moved from chief financial officer to head of Treasury and Securities Services, a business that moves money around the world for big clients like multinational companies. That business generates stable revenue, but running it is not usually seen on Wall Street as requiring tremendous management acumen.
But in May, Cavanagh was put in charge of a group that oversaw the bank’s response to losses in the CIO. He will now oversee corporate and investment banking businesses such as lending and merger advisory.
Cavanagh is a longtime protégé of Dimon. When Dimon was president of Citigroup (C.N), Cavanagh was chief administrative officer.
In 2000, Cavanagh followed Dimon to Banc One Corp as head of strategy and planning when Dimon became the bank’s CEO.
Pinto, who heads JPMorgan’s business in Europe, the Middle East and Africa as well as its global fixed-income business, will oversee all trading operations. He will remain based in London.
SMITH’S PORTFOLIO GROWS
Gordon Smith, 53, will have mortgage lending and retail banking added to his remit, giving him oversight of all consumer banking businesses.
Smith, a former American Express Co (AXP.N) executive, currently oversees credit cards and auto lending, and some analysts view him as a possible successor to Dimon. He is a little younger than Dimon but a little older than executives such as Cavanagh and Pinto.
For now, Smith will run the consumer banking business together with Todd Maclin, 56. But in 2013, Maclin will become a chairman of the consumer business.
Frank Bisignano, 52, who was put in charge of overhauling the mortgage business last year, in addition to his role as chief administrative officer of the bank, will become co-chief operating officer of JPMorgan as Smith takes on the mortgage business.
Bisignano will share the COO post with Zames, who will remain head of the CIO and Mortgage Capital Markets.
In May, Zames was put in direct charge of the CIO. He has been unwinding the money-losing portfolio and overhauling the office. He will continue to run the CIO in his new post. (Reporting by David Henry and Jed Horowitz, Editing by Dan Wilchins, Dale Hudson and John Wallace)