— Jamie Dimon during an interview with Fortune magazine
The tall, blue-eyed man sat slumped at his desk, the picture of exhaustion. A little more gray would definitely have been added to his thick shock of hair in the last couple of days, but it had been worth it. Jamie Dimon, the Chief Executive Officer of JP Morgan Chase, had just struck the biggest deal of his life. March 16, 2008 saw the creation of Jamie Dimon the legend. When he bought the troubled Bear Stearns for an unbelievable price of $260.5 million, he is said to have practically hauled Wall Street up by its neck from the dungeon of economic doom. This for a company whose last reported net worth was $11.7 billion.
But 53-year old Dimon was a bit of a legend even before that. Known to be one of the sharpest of cost-cutters, Dimon became President of JP Morgan (Research) in 2004 when it acquired BankOne, once the sixth largest bank in the U.S., where he was the Chief Executive Officer. Dimon discovered that regional bank managers at JP Morgan earned around $2 million, which was much more than the $400,000 that their counterparts received in BankOne. Immediately, Dimon announced that he was slashing compensations by 20% to 50% over the next two years.
That’s probably because Dimon was born with business as his bedfellow. The son of a stockbroker, with his roots going back to Greece and Turkey, Dimon was raised in Queens, New York. He graduated from Tufts University and Harvard Business School, and by the time he was just 26 years old, he accepted an offer to work with Sandy Weill, the then President of American Express. Dimon stayed with Weill for almost two decades harboring quite a few ups and downs. He followed Weill when he was forced out of American Express and together they set up a financial services firm called Commercial Credit. With the combined efforts of Weill, the hard nosed deal maker, and Dimon, the brilliant number cruncher, Commercial went on to command a strong presence in the financial world. They got through a string of successful acquisitions including Travelers Corporation, an insurance company, whose name they later adopted. Weill and Dimon, often likened to a father and son pair, got their biggest breakthrough when they merged Travelers with Citigroup.
But by now differences had begun to crop up between mentor and student and finally Dimon was forced to leave Citigroup. He joined BankOne for a top position and managed to double the value of the company in less than two years. After negotiating the purchase deal with JP Morgan, he was named President and finally climbed up two years later to being Chief Executive.
His stupendous success can perhaps be attributed to a bit of both an innate talent as well as firm work ethic. Dimon is not known to mince words but someone who openly makes disparaging remarks in meetings about even senior executives. He is notorious as an extremely tough manager, often haranguing his employees about overspending to the point of being seen as a bit of a penny pincher. Maybe that’s how he was able to steer JP Morgan through a crisis that ended the lives of Bear Stearns and Lehman Brothers and began an era of recession.
A big financial institution like JP Morgan “can get arrogant and full of hubris and lose focus, like the Roman Empire,” says Dimon. To prevent it, he has fashioned meticulous pay-for-performance metrics and rules that require managers to present comprehensive monthly reviews. It is no big surprise that his company sailed through the recent U.S. government mandated bank stress tests, which showed that JP Morgan Chase requires no new capital to survive. Amidst the blazing global financial crisis, Dimon emerged the successful survivor, while most other financial institutions were left smoking in ruins. And like tempered steel, his resolute, no-nonsense style are more of what corporations and governments alike, need right now.
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