JPMorgan Chase will make more than 30 acquisitions in 2021, putting America’s largest bank to asset on track for its largest purchase spree in years.
The acquisitions, especially of smaller companies ranging from an online money manager in Britain to a Brazilian digital bank, are a sign of how JPMorgan’s chief executive, Jamie Dimon, is turning to business to grow the banking giant.
Parts of the bank’s core business have been plagued by low interest rates and are facing greater competition from financial technology companies and unregulated lenders.
Dimon marked last year that JPMorgan would be “more aggressive in purchasing across the board.”
The bank has done 33 deals so far in 2021, a staggering total of its total for 2019, according to Refinitiv data. The prices of most of the businesses were not disclosed publicly.
Nine of the deals were made in June, including two last week: the acquisition of OpenInvest, a platform that allows clients to customize a portfolio based on environmental, social and governance metrics, and a minority stake in the Brazilian digital bank C6.
This follows his nutmeg acquisitions, a digital wealth management platform in the UK, for about $ 700m and Campbell Global, a timberland forest management and investment company.
In March, JPMorgan also took a 10 percent stake in China Merchants Bank’s wealth management business for about $ 410 million.
“It’s a string of pearls approaching where they buy smaller fintech companies to better advance their business management with lower cultural, operational and goodwill barriers that come with a large acquisition,” said Mike Mayo , Wells Fargo analyst.
JPMorgan can then leverage those smaller companies with its larger network, Mayo added. “The key word here is scalability and how well they can link and leverage these offerings to their existing business and to sales customers.”
The analyst said the bank is also targeting business to respond to the growing demand from investors for ESG exposure and to customers seeking digital banking and asset management services.
“The focus seems to be on companies that can support JPMorgan’s digital strategies or companies that can give the company an edge in the rapidly growing area of ESG investment,” said James Shanahan, analyst at Edward Jones .
For Dimon, who has led JPMorgan since 2005, the deal marked a return to its roots on Wall Street, where he served as Sandy Weill’s deputy chief during a series of purchases which led to the creation of Citigroup.
The emphasis on making smaller purchases has also highlighted obstacles to JPMorgan making a bigger deal for a rival bank, which would run counter to regulatory deposit limits.
One area where JPMorgan has indicated a willingness to do bigger business is in asset management. The bank game over to Morgan Stanley last year in the $ 7 billion bidding war for U.S. investment director Eaton Vance.
JPMorgan’s acquisition of OpenInvest was also the latest attempt by established players to expand into customized investment services. Morgan Stanley gained control of Parametric, a direct indexing platform, when it bought Eaton Vance last year, while BlackRock bought Aperio, another direct indexing venture, November.
JPMorgan’s asset management business “does well and has decent net flows for an active manager [but] they lack a passive presence and are behind BlackRock, Vanguard and State Street, ”Mayo said.
Ultimately, businesses represent an attempt to find revenue streams beyond traditional banking services – an imperative Dimon addressed at a conference in June.
“I think the banking system will really be in a tough shape. That’s my own personal vision. And there will be winners here, but they won’t all be there,” Dimon said.
Asked if JPMorgan would win, Dimon replied: “We will do whatever it takes. And so help us, God. “