Financial services giant JPMorgan Chase & Co. (JPM) said Tuesday that it plans to shift $100 billion in large non-operating deposits to operating deposits by the end of 2015 in order to prepare itself for new capital requirement rules proposed by the U.S. Federal Reserve to be effective this year.
New York-based JPMorgan's CFO Marianne Lake revealed this while providing an overview in his presentation at the annual investor day.
Lake said these deposits are mostly from financial institutions and the new rules will make holding money for the clients too costly. He added that exiting a major chunk of these deposit balances is a rational economic decision as certain deposits are less profitable to handle than they used to be.
The move is the latest in a series of steps large global banks have been discussing in recent months to discourage certain deposits due to new regulations and low interest rates.
However, the plan will not affect the bank's retail customers, but some corporate clients and especially an array of financial firms, including hedge funds, private-equity firms and foreign banks, will feel the impact.
The new capital requirement rules, known as G-SIB, are expected to be unveiled later in the year for 29 global systemically financial institutions.
The implementation of the rules that measure banks' riskiness are expected to create even more pressure on banks like JPMorgan to cut costs and shore up its capital position.
The company also said it expects annual expenses in 2015 to decline about $1.4 billion to about $57 billion from the $58.4 billion reported in 2014.
JPMorgan is moving fast to cut costs and shore up its capital position as reports in December quoting Fed Vice Chairman Stanley Fischer stated that the company faces a $22 billion capital shortfall under the new proposed rules.
The Federal Reserve said earlier that it has proposed a rule to further strengthen the capital positions of the largest, most systemically important U.S. bank holding companies. A company identified as a global systemically important banking organization or G-SIB would be subject to a risk-based capital surcharge that is calibrated based on the bank's systemic risk profile.
Meanwhile, reacting to analysts' suggestion that splitting the company into two will save it $15 billion, Lake said during the presentation it would have to duplicate its finance, risk, and audit divisions, among others, at great expense. JPM closed Tuesday's regular trading session at $60.82, up $1.47 or 2.48% on a volume of 22.94 million shares.
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May 01, 2026 15:54 ET Central banks dominated the economics news flow this week with almost all major ones announcing their latest policy decisions and many boosted expectations for a rate hike in June. In other news, several countries released the preliminary data for first quarter economic growth. In the U.S., comments by Fed Chair Jerome Powell were also in focus as his term ends this month.