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JPMorgan shuffles investment banking division

JPMorgan Chase named Jes Staley the head of its investment bank, a move that could put Staley in a position to step in as the new CEO should the bank's current chief, Jamie Dimon, leave.
/ Source: The Associated Press

JPMorgan Chase & Co. named Jes Staley the head of its investment bank, a move that could put Staley in a position to potentially step in as the new CEO should the bank's current chief, Jamie Dimon, leave or retire unexpectedly.

JPMorgan said Tuesday that Staley, 53, is taking over leadership of the investment bank — one of JPMorgan's most important divisions and largest sources of revenues — from co-CEOs Steve Black and Bill Winters.

The company did not give a reason for the changes. A spokesman did not immediately reply to a request for comment.

Black, 57, will become the executive chairman of the investment bank, and remain in that position through the end of 2010 after turning over day-to-day oversight of the division to Staley. Staley will report to Black.

Winters, 48, is leaving the company. JPMorgan did not disclose his plans.

Winters and Black helped oversee the investment bank through one of the roughest patches in the financial sector since the Great Depression. As the credit crisis has eased, the division has again thrived.

Charles Murphy, a professor of finance at New York University's Stern School of Business, said banks have become very aware following the credit crisis and financial turmoil of the past year of the need to groom potential successors for their CEOs. This provides continuity and confidence for employees and investors to know who would step in and replace the CEO should something happen, Murphy said.

"In the unforeseen event Dimon is not at JPMorgan tomorrow, (Dimon) is doing the right thing to identify people he trusts to take his job someday," Murphy said, adding there is no indication that Dimon, also 53, is going anywhere, anytime soon.

Profits in the investment bank more than tripled to $1.5 billion during the second quarter on higher underwriting fees and gains in its bonds business. Those strong earnings helped propel the company to a $2.72 billion profit during the April-June period, even as loan losses piled up in the more traditional consumer banking operations cutting into profits.

New York-based JPMorgan has been able to take advantage of a decline in competition and its relative strength compared to other banks during the downturn. JPMorgan navigated the economic turmoil as one of the strongest banks in the country, and has already repaid its $25 billion in government bailout money it received last fall at the height of the crisis.

Staley most recently served as the head of the asset management division. He has been at JPMorgan since 1979 and spent 20 years working in the investment bank. Aside from the investment banking and asset management divisions, Staley has also worked in the bank's Latin America division and was one of the founding members of the bank's equities business.

Murphy said rotating Staley from asset management to investment bank roles makes sense because it gives him a broader background should he ever assume CEO responsibilities for the entire bank.

Staley's former role as head of asset management will be taken over by Mary Callahan Erdoes. Erdoes, 42, was formerly in charge of the private bank unit.