JP Morgan Chase, one of the few banks to survive the Great Recession in good financial health, announced Feb. 27, 2013 that it will cut about 19,000 jobs from payrolls over the next two years.
JP Morgan officials say that the majority of the layoffs will take place in its mortgage unit- a division that ballooned to approximately 50,000 employees over the past few years due to the need to handle defaulted mortgages. The financial institution expects about 15,000 job cuts from this area with the remaining job losses coming from its consumer banking business.
The reduction in jobs may come as a surprise to those who follow the industry because, as many are aware, JP Morgan Chase was not affected much by the economic downturn and it improved both sales revenue and profits in 2012. With financial conditions on solid ground, JP Morgan Chase might seem like the last bank that would consider layoffs.
But financial conditions in the banking industry are still very uncertain and the future of banking is still one large question mark. Mainly, it is because government regulations, both present regulations and future regulations, greatly concern JP Morgan Chase and its peers. With so many failed banks and defaulted loans attributable in part to haphazard banking practices of the past several years, added government regulation could be just around the corner. An added regulation here and there could completely alter the way banks conduct business and JP Morgan Chase wants to remain a step ahead in the game.
The news isn’t entirely negative for those working at JP Morgan Chase, however. The bank says it plans to add more jobs in areas such as commercial banking and asset management and some of the displaced employees may be reassigned in these areas. Combining the additional jobs with the planned layoffs shows an overall reduction in jobs of about 17,000 between now and December, 2014. This would represent a reduction of about 6.5 percent from the current workforce, which numbers about 259,000.
Wall Street has reacted positively today to this and other market news, with shares higher in mid- afternoon trading.
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