JP Morgan: banking on a recovery?
JP MORGAN CORPORATE REPUTATION
Global - Earlier this year, JPMorgan sparked fears reminiscent of the 2009 Lehman Brothers fiasco, with its US$2 billion trading loss, with the public once again questioning regulators' ability to monitor the finance industry.
For JPMorgan, this has been an especially trying period as Congress began investigations into the losses. Chief executive officer Jamie Dimon (pictured) has been actively fronting the bank's crisis, admitting to the Senate the losses, which pulled nearly US$23 billion from the bank's market value, could be attributed to a weak investing strategy along with "management failures", according to a Bloomberg report.
While Dimon has been quick to offer his mea culpas and openly criticise his own leadership and the bank's processes to the Senate Banking Committee, investigations are still ongoing.
"We have to get rid of anything that looks like too-big-to-fail," Dimon said.
"We have to allow our big institutions to fail. It's part of the health of the system. We shouldn't prop them up. We have to allow them to fail," admitting in another interview the bank had been "stupid".
While it seems measures are being carried out to remedy the disaster, just how much has its reputation suffered? According to the San Francisco Chronicle, JPMorgan shareholders have already seen almost US$39 billion of market value wiped out since the loss was first reported in April this year. Has the debacle really dented JPMorgan's reputation? If so, where is the road to recovery?
Bill Rylance, founder and CEO, Watatawa says that the JPMorgan situation simply reaffirms that a company's reputation is its most valuable asset.
He says that that the actual trading loss in comparison to what JP Morgan made last year in pure profit (roughly $39 billion) is small, but the damage to its reputation could cost the company more in the long run.
"The initial US$2 billion loss quickly sliced US$14 billion off JPMorgan's market cap. Many billions have been burned and people have lost their jobs, some rightly so. The loss will cost much more, in terms of JPM's valuation, customer confidence and the wider public perception, as well as the very real likelihood of tougher legislative or regulatory restrictions," Rylance added.
According to Stephen Robertson, director, Southeast Asia, Edelman, the key for brands such as JPMorgan is to understand the drivers of corporate reputation and the relevance of its internal corporate culture and external business conduct.
For the full story, read Marketing Magazine Singapore's July issue.
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- JP Morgan
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