JP Morgan Prime Brokerage
Below please find a short profile created based on publicly available notes, articles and press releases on JP Morgan's prime brokerage business:
Resource #1: J.P. Morgan's rescue of Bear Stearns has likely dampened its interest in bidding for the prime-brokerage unit that is being offered by Bank of America.
One of the jewels that comes with J.P. Morgan's government-assisted acquisition is Bear's profitable prime-brokerage unit, which recently ranked in the top three in that business - along with Goldman Sachs and Morgan Stanley. Bear's franchise was tarnished in recent weeks as many of its clients fled, making it hard to determine how much of the business remains.
In January, BofA responded to credit-crunch losses by scaling back its investment banking business and putting its prime-brokerage operation on the auction block. J.P. Morgan has been rumored to be among the leading suitors of that unit, along with Barclays, BNP Paribas and, to a lesser extent, Royal Bank of Scotland and Jefferies Group.
Integrating Bear's prime-brokerage business into the small fixed-income and derivatives brokerage operation that J.P. Morgan has operated since 2003 looms as a daunting task for the bank - one that would make it extremely difficult to simultaneously merge BofA's operation.
Also, it's likely that many of the hedge funds that clear their trades and borrow from BofA have also done so at Bear. There might be enough overlap of clients to make such an acquisition less valuable to J.P. Morgan. source
Resource #2 (4.20.09) JPMorgan Chase & Co. became the third major U.S. bank after Goldman Sachs and Wells Fargo to post profits for its first quarter, beating analyst estimates and sending its stock price rising to over $33 in late trading at the New York Stock Exchange (NYSE).
The company reported profits of $2.14 billion, or 40 cents a share, down 10 percent from over a year ago. Its revenue jumped to $26.9 billion, almost 50 percent over the year earlier. Its profit was still higher than analyst estimates, and its market cap has close to doubled over the last month based on expected strong showing from the bank.
The rise in earnings was mostly from strong performance from its investment banking division, which posted earnings of $3.6 billion compared to a loss last year. The investment banking division was primarily driven by JPMorgan’s prime brokerage business, which the bank acquired in its fire-sale acquisition of failing investment firm Bear Stearns last year.
"Bear Stearns equity [trading] business was very strong," JPMorgan CEO Jamie Dimon said during a conference call Thursday as quoted by the Wall Street Journal. source
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