New heir at the house of Morgan
Posted
Sep 29 2009, 03:13 PM
by
James Dlugosch
Rating:
This morning I saw an interesting interview with Alan “Ace” Greenberg, former chief executive of Bear Stearns, on CNBC. Asked to comment on the views of JP Morgan (JPM) Chief Jamie Dimon, Greenberg demurred and backed the banking genius 100%.
“Whatever Jamie says, I agree,” he said.
Bing: More on JP Morgan
You will not often find Wall Street executives reluctant to share opinions. These guys have strong egos, and Ace has one of the biggest. His deference to Dimon is very telling.
There are few, if any, who can match skills with Dimon. He has a long history of success, culminating with his leadership and stewardship of JP Morgan (JPM). Morgan has nimbly navigated the waters of a recession and a financial meltdown, and emerged relatively unscathed.
Because of that success, Morgan trades only slightly lower than the stock traded before the crisis. Not bad, considering the carnage.
The question for investors going forward is what happens when Dimon retires?
Today, JP Morgan put Jes Staley in line to succeed Dimon by naming him the new head of the investment banking division. The 30-year veteran will replace the current co-chief executives leaving that post.
Investors need not worry about an imminent departure of Dimon, but this move does raise the succession question. Dimon is clearly a star, and when a star leaves, a company can suffer.
Take a look at General Electric (GE). That company has not come close to reaching the levels achieved during the reign of vaunted CEO, Jack Welch.
How about Apple Computer (AAPL)? The technology leader saw its shares plunge on concern regarding the health of its star CEO, Steve Jobs.
It is a tricky business for any company to replace a star CEO, and Morgan won't find it easy. But don’t expect shares to suffer much when Dimon eventually leaves. A bank is not at all like a technology company or an industrial company.
Although the recent crisis might have you think otherwise, a bank is pretty hard to screw up. The crisis was a once-in-a-lifetime event. Generally, banking is a pretty simple business. You hold money, you lend money, you borrow money.
JPM certainly benefits from having the services of Dimon, but the bank will be far from lost when he leaves.
It is encouraging that JPM is planning for the future, but don’t expect the news to move the stock one way or the other. This news is much ado about nothing.
At the time of publication, James Dlugosch did not own shares in JP Morgan, General Electric or Apple.
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