JP MORGAN - 2003
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  • Introduction : Why did we choose JPMorgan in order to answer to the problematic . Indeed it is a giant American firm which has existed in France for a long time as it will be explained in the history of the organization .That’s why we thought that it would be a good idea to see the reasons of the presence of JPMorgan in France in spite of all the social rules and the repressive laws on labour . In order to get all the information about the subject , we met the JPMorgan France VP Benoit Lebizet who taught us how was working JPMorgan France .
  • The French Financial market has been characterized by a strong presence of the state .Then there were a lot of mergers &acquisitions following the liberal wave . Thats why there is a great competition .
  • All this services are not proposed in Paris :for example the retail bank is only proposed in the US or the private equity sector is concentrated in London . Explanation /activity :-Investment Bank: Mergers&acquisitions ,Advice ,Global Market -Private Bank :in charge of big portfolios of rich people -Asset Management : to manage different type of assets :shares ,derivatives … -Retail Bank :it is the usual bank (credit ,visa cards ….)
  • As we may see there is a great competition in the french market between many big firms . In 2001 the ranking concerning the mergers&acquisitions was :1/MORGAN STANLEY 2/ROTSCHILD 3/LAZARD 4/JPMORGAN 5/BNP PARIBAS 6/SCHRODER SALOMON SMITH&BARNEY 7/GOLDMAN SACHS 8/CREDIT SUISSE FIRST BOSTON ….
  • JP Morgan has played a key-role in the financement of the industrialization of the USA, at the end of the 19th century. It has thus financed the developement of US Steel Company, General Electrics and American Telephone and Telegraph. JP Morgan has, consequently, a tradition of fnancing major companies, which remained its clients until now. It has also helped government, such as in 1870, when it accepted to loan money to the French government during the Franco-Prussian war. Later on, in the 1980’s, it helped the Mexican and the Russian governments handle their debts. JP Morgan has always been an adviser for wealthy individuals, which also constitute its basis of clients.
  • Junius S. Morgan, an American businessman, made famous the name of Morgan thoughout the world as a merchant banker in the Victorian London Then, J. Pierpont Morgan inherited his father’s business in 1890 and developed the bank, leaving it afterwards to his son in 1913
  • After the 1929 krasch, the American government decided to better regulate the banking sector. The Glass-Steagall Act in 1935 obliges to split prvate banking and investment banking. Some of JP Morgan employees create, with Harry Morgan, the investment bank Morgan Stanley In the late 1960s and 70s, London resurged as a center of finance. Lewis Preston, then manager of the London branch and later a Morgan chairman, moved aggressively into this market. The decision turned out to be profitable. The prohibitions of Glass-Steagall did not cripple Morgan outside the United States, where widening opportunities in banking and securities proved to be a growing source of revenue.
  • In 2000, JP Morgan merged with The Chase Manhattan Corporation to form J.P. Morgan Chase & Co. The advantages of this merging will be developed later on.
  • JP Morgan Chase has a matricial structure: both by activity (investment banking, treasory and security service, investment management and private banking, JP Morgan partners – private equity investing, retail and middle market financial service) and by geographical zone (United States 50%, Europe, Asia, Latin America). The major revenue comes from investment banking. Then comes the retail and middle market financial service, which only exists in the United States. At the third row, with have both private banking and treasory services. JP Morgan partners is only an indirect source of revenue. The French subsidiary has only some activities : mainly investment banking, and also private banking and asset management (no retail banking). It is one of the major subsidiaries of JP Morgan International. But as said in the introduction of our presentation, JP Morgan publishes no precise figures on its subsidiaries. According Benoît Lebizay, Vice President of JP Morgan France, JP Morgan is the first foreign investement manager in our country.
  • However their expectations are pretty similar and both very demanding this is one of the reasons why in such an economical context the firm opted for a clear marketing approach. The principal aim was: a smaller company focusing on private customers in order to be complementary with the rest of the Morgan company(more into the institutional market); which has brought a high recognition level in Asia where Morgan had only a little penetration.
  • According to Patrick de Fayet – former vice president of the French office - there are basically two kinds of customers: some wealthy business men of the Internet and the high tech sector and a great majority of « traditional investors ». More generally its includes: industries, small business owners and middle market companies. Let’s precise that the managerial teams are completely independent from the core company which allows the firms not to enter in competition but also to the French branch to make some strategic decisions.
  • When comparing the two kinds of customers we can say that there ones that have a more recent fortune pay more attention to the methods of management they expect to be offered a tighter relationship with both their counselor and their portfolio manager. The mentality of both kind of investors is very different in fact the business men search for a coach whereas the latter don’t. Those investors constitute the youngest investors(average age of about 40) that are usually in the high-technology sector and, as a consequence need larger information , JP Morgan aims at deepen the relationship with them in order to make them save time. « Clients of JP Morgan Private Bank recognize the combined power of our « global roots » and « local presence ».Our firm can follow a high clients network locally in Europe and around the world(..) Clients like de fact that we can provide experience and solutions across a broad range of needs in multiple geographies » Hervé de Montlivaut - Managing Director (JP Morgan Private Bank France)
  • In order to do so the firm needs to continue to be innovative in services and technologies The economical context has reduced the number of new customers but figures show that JP Morgan is still number one in France, which shows that the company’ strategy adapted to the local demand However the latest events in the world and the economic environment have led to a management still dynamic but also focused on risk and yield. The performances regarding the investment returns are lower than they used to be but the priority is the risk management. In this given environment we can say that investors have lower expectations regarding the returns but are all the more demanding in the matter of risk management that the insecurity is high.
  • The French site hires around 780 portfolio managers and offers a large diversity of financial products . The whole staff is directly hired by JP Morgan France excepted for a few central departments (such as internal auditing).
  • Client relationships are among the top priorities of the firm. In fact JP Morgan strongly believes that improving relationship and quality of services will enhance all customers’ satisfaction: “We believe in developing long term relationships with customers whether they are industries, small business owners or middle market companies. It involves delivering responsible, high-quality services at every customer touch-point (retail)” In an unstable market all types of customers search for performances but mostly competent advice , that the company provides Among them the customer relationship: every clients has direct contact with a counselor responsible for the commercial aspects as a whole, and also someone in charge of the administrative issues. Finally a Client Portfolio Manager draw conclusions every quarter and a reporting gives precise information about the portfolio itself and the investment decisions that have been taken. The firm prefers a disciplined team work with respect to the investments and conducts fundamental analysis when choosing financial assets, it also watches out for risk and operates an effective geographical and sector-based diversification. As a consequence the French private bank supplies a scale of diversified products covering the principal geographical areas(USA, Europe, Asia, Japan) and besides the bank provides the clients with a large number of post-purchase services As a matter of fact, Fitch-AMR that estimates the investment banks according to their structure, their independency level, the quality of the communication with the clients, the investment process and the risk management ranked JP Morgan Private banking among the 5 best institutions.
  • One of the strength of JP Morgan is the ability to offer its clients individualized solutions synthesizing industry In fact it has been shown that the present market is still evolving but the demand is more and more sophisticated and investors look for customized solutions ; that is when the marketing decisions have played a decisive role. In this same line the pieces of advice are free thus the money comes from the assets sold, the management fees and the « droits de garde ». One of the strength of JP Morgan is the ability to offer its clients individualized solutions synthesizing industry knowledge, product efficiency and geographical expertise. The choice has been made to create a relationship with the customer, and thus to have a clearly defined communication strategy based on transparency and high performance. Trough our research we have been able to see that the methods of management are pretty much harmonized even though every office is independent , there is not a French specificity when talking about the methods of management there is simply an adaptation to the financial context.
  • A POWERFUL GROUP, IN FRANCE AND WORLDWIDE JPMorgan efficiency is first of all due to its success all over the world. It is integrated in a large network of leading firms (« JPMorgan Partners »), and it has a good reputation among the industries it deals with. The firm has been going through hard times because of the Enron scandal in which it was involved, and also after the 11th September attacks. JPMorgan has played an important role in the French economical life since the beginning of the 20th Century: it has lended money to the French government during World War 1. The group is the leading foreign investment manager in France.
  • THE CONSEQUENCES OF THE 2001 MERGER This merger was one of the biggest ever concluded. It allowed the group to be much bigger on several markets. The main activities of the 3 firms are complementary activities: IB for JPMorgan; Retail Banking for Chase Manhattan; Asset Management for Flemmings. JPMorganChase had to deal with an important merger: integration of several management styles, and of working teams.
  • SOCIAL LAWS AND CONSTRAINTS The French law system and environment is very tough, since any procedure takes a lot of time and is largely in favor of the workers. JPMorgan is sometimes discouraged from taking risks.
  • THE PHILOSOPHY OF CONSENSUS Consensus has become a necessity in the decision process: this is both a consequence of the global organization of the firm (matricial organization) and of the particularity of the French workers. An innovation of JPMorgan Chase: the « LeadershipMorganChase », which are seminars aimed at developing leadership and creating a dtrong common culture. As a consequence of the merger, the firm needs to stimulate the enthousiasm of the workers, so that they participate in creating a new culture in the new firm. Employee polls show a tremendous level of international support.

JP MORGAN - 2003 Presentation Transcript

  • 1. SEMINAIRE DECOUVERTE DES ORGANISATIONS M. SEGALLA, Ph.D. Aurélia Monnier Giulia Marini Othmane Mrabet Caroline Lagayette
  • 2. « BEST IN France » JP MORGAN
    • WHY JPMORGAN ?
      • AN AMERICAN GIANT
      • A GOOD RANKING
    • WHY BEST IN France ?
    • How did we collect the information : Benoit Lebizay, JPMorgan VP
  • 3. JP MORGAN AND THE FRENCH FINANCIAL MARKET
    • Structure of the French Financial Market :
      • History
      • Mergers &Acquisitions
      • Great Competition
    . .
  • 4. What are the different services proposed by JP MORGAN
    • INVESTMENT BANK
    • PRIVATE BANK
    • ASSET MANAGEMENT
    • RETAIL BANK
  • 5. THE MAIN COMPETITORS
    • FRENCH FIRMS:
    • BNP PARIBAS /SOCIETE GENERALE
    • CREDIT LYONNAIS
    OTHERS : GOLDMAN SACHS / MORGAN STANLEY ROTSCHILD BANK /DEUTSCH BANK /LEHMANN BROTHERS …….
  • 6. 1.DESCRIPTION OF THE FIRM
  • 7. HISTORY OF THE ORGANIZATION
    • JP MORGAN : 1858-2000
      • A tradition of client service :
        • A major role in the industrialization of the USA at the end of the 19th century
        • Loans to States in the 19th century and in the 1980’s
        • A leading financial adviser for wealthy individuals
  • 8. HISTORY OF THE ORGANIZATION
    • JP MORGAN : 1858-2000 :
      • A family legacy
        • A family banking dynasty for over a century
  • 9. HISTORY OF THE OGANIZATION
    • JP MORGAN : 1858-2000 :
      • A house divided
        • 1935 : the Glass-Steagall act
        • The creation of the investment bank Morgan Stanley
        • The mondial expansion
  • 10. HISTORY OF THE ORGANIZATION
    • JP MORGAN CHASE & CO : 2000-2003
      • A successful merging
  • 11. THE STRUCTURE OF THE COMPANY
    • HOW JP MORGAN INTERNATIONAL IS ORGANIZED
      • A matricial structure
      • The position of JP Morgan France
    • CEO : William B. Harrisson
  • 12. 2. THE CUSTOMERS AND THE FRENCH SUPPLY IN THIS SECTOR
  • 13. WHO ARE JP MORGAN’S CUSTOMERS?
    • Two main customer profiles:
            • Traditional customers
            • New customers
  • 14. WHAT ARE THEIR NEEDS AND EXPECTATIONS?
    • Different profiles,different approaches
  • 15. HOW DOES JP MORGAN KEEP ITS CUSTOMERSHIP?
    • JP Morgan focuses on its existing customers and on maintaining its attractiveness
    • The latest economical environment and its consequences
  • 16. WHO IS WORKING FOR JP MORGAN IN FRANCE? .
  • 17. HOW DO THEY WORK?
    • Clients relationships: a priority
    • Do they match customer expectations?
    • A key to success?
  • 18. MEETING OPPOSITE DEMANDS
    • Customization
    • Standardization
  • 19. 3. WHY IS JMPORGAN « BEST IN FRANCE »?
  • 20. WHY IS THE FIRM SUCCESSFUL IN FRANCE ?
    • A POWERFUL GROUP INTEGRATED INTO A VERY LARGE NETWORK OF FIRMS
    • JPMORGAN HAS A GOOD REPUTATION IN FRANCE THANKS TO HISTORICAL AND ECONOMICAL FACTORS
  • 21. WHY IS THE FIRM SUCCESSFUL IN FRANCE ?
    • THE MERGER: JPMORGAN + CHASE MANHATTAN BANK + FLEMMINGS
    • A NEW STYLE OF MANAGEMENT: THE COMBINATIONS OF DIFFERENT STRATEGIES
  • 22. THE BAD ASPECTS OF THE FRENCH MARKET
    • THE SOCIAL LAWS AND CONSTRAINTS IN FRANCE SOMETIMES DISCOURAGE THE FIRM FROM TAKING RISKS
  • 23. THE BAD ASPECTS OF THE FRENCH MARKET
    • THE NECESSITY OF A PARTICULAR APPROACH: CONSENSUS
  • 24. CONCLUSION
    • « JPMORGANCHASE COULDN’T POSSIBLY AVOID BEING IN FRANCE », AS B.LEBIZAY SAID
    • A GREAT SOURCE OF CREATIVE MINDS