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JPMorgan Chase has made more than 30 acquisitions in 2021, making it the largest asset bank in the United States for its largest purchase in years.
Acquisitions, mostly from smaller companies, ranging from an online money manager in Britain to a Brazilian digital bank, are a sign of how JPMorgan chief Jamie Dimon is turning to deals to make grow the banking giant.
Some parts of the bank’s core business have been bogged down by low interest rates and face increased competition from financial technology companies and unregulated lenders.
Dimon marked last year that JPMorgan would be “more aggressive in general acquisitions.”
The bank has made 33 transactions so far in 2021, a portion of its total throughout 2019, according to Refinitiv data. The prices of most of the offers were not publicly disclosed.
Nine of the offerings took place in June, including two last week: the purchase of OpenInvest, a platform that allows clients to customize a portfolio based on environmental, social and governance metrics, and a minority stake in Brazilian digital bank C6 .
This followed his nutmeg acquisitions, a UK $ 700 million digital wealth management platform and Campbell Global, a forest investment and forest management company.
In March, JPMorgan also acquired a 10% stake in China Merchants Bank’s wealth management business for about $ 410 million.
“It’s a pearl chain approach where they buy smaller fintech technology companies to better advance the asset management business with lower cultural, operational and goodwill barriers than big acquisition,” Mike Mayo said. Wells Fargo analyst.
JPMorgan can leverage smaller businesses with its large network, Mayo added. “The key word here is scalability and the extent to which they can link and leverage these offerings to their existing businesses and to all retail customers.”
Banks are also turning to bids to meet the growing demand from ESG exposure investors and customers looking for digital banking and asset management services, analysts said.
“It seems to focus on companies that can support JPMorgan’s digital strategies or on companies that can offer the company an edge in the area of rapid growth in ESG investment,” said James Shanahan, analyst of Edward Jones.
For Dimon, who has led JPMorgan since 2005, the negotiation marked a return to his roots on Wall Street, where he served as Sandy Weill’s chief lieutenant for a series of acquisitions which led to the creation of Citigroup.
The emphasis on making smaller acquisitions also highlighted the obstacles JPMorgan poses to making a larger deal for a rival bank, which would run into regulatory limits on deposits.
One area where JPMorgan has indicated its willingness to conduct larger transactions is asset management. The Bank Lost to Morgan Stanley last year in the $ 7 billion bidding war for U.S. investment manager Eaton Vance.
The purchase of OpenInvest by JPMorgan was also the last attempt by established players to expand into personalized 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 company, in November.
JPMorgan’s asset management business “is doing well and they have had decent net flows for an active manager [but] they lack a passive presence and are behind BlackRock, Vanguard and State Street, ”said Mayo.
Ultimately, operations represent an attempt to find revenue streams beyond traditional banking services, an imperative Dimon headed at a conference in June.
“I think the banking system will be really difficult. This is my own personal vision. And there will be winners, but not all of them, ”Dimon said.
Asked if JPMorgan would emerge victorious, Dimon replied, “We will do whatever it takes. And so help us, God ”.
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