Battle of the bulge bracket

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Battle of the bulge bracket

Two decades and billions of dollars ago, Wall Street's most noble credit institution began to reinvent itself as a hybrid investment-cum-wholesale bank. For a while it seemed unstoppable. But this year JP Morgan stumbled - amid rumours of takeover. Parity with those bulge bracket firms still seems so near - and yet so far. Antony Currie reports.

You always knew where you were with JP Morgan. Stable, conservative, intellectual almost to the point of introversion, always there for the client, the commercial bank had one of the strongest cultures on Wall Street. What's more, it was known for taking care of its staff as well as its clients. It has bankrolled governments and large corporations worldwide for over a century, was dubbed Mother Morgan by its employees and became an icon for the whole financial services industry.

But the past year has not been kind to JP Morgan. A series of events has conspired to make many in the industry question its strategy, dating back to the early 1980s, of transforming itself into an investment bank. A rapidly consolidating industry has left it looking like a minnow rather than the whale it was two years ago.

Losses in Asia and Russia, and its large exposures to Latin America have seriously dented the revenues from its emerging markets division - considered to be one of the market leaders - and hit the bank's bottom line. And rivals and investors doubt that it will gain enough momentum in equities and corporate advisory to warrant the vast sums invested over the past decade.

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