Battle Of The Bulge-Bracket Banks

First: “Bulge-bracket” is a colloquialism of the financial industry used to describe the largest multinational banks. Bulge-bracket banks are the largest firms in size, market capitalization, and levels of security issuances.

Second: The current list of global financial powerhouses include J.P. Morgan, Goldman Sachs, Wells Fargo, Bank of America, Morgan Stanley, UBS, Barclays, and Citigroup.

Third: These investment power-players are highly competitive and have battled each other for industry supremacy for decades on decades.

Which brings us to the recent development involving J.P. Morgan and Wells Fargo (via WSJ). Peep this shit:

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Just two weeks ago, J.P. Morgan surpassed Wells Fargo as the largest bulge-bracket bank in terms of market cap for the first time since March 2014. Via WSJ:

“Wells Fargo shares declined 3.3% Tuesday, more double than the 1.6% fall in the KBW Nasdaq Bank Index, while J.P. Morgan fell 0.8%. That differential dragged the market cap of Wells Fargo down to $236.94 billion, versus J.P. Morgan’s $240.31 billion, according to analysis of FactSet data.”

The large 3.3% decline in Wells’ stock price came following revelations that the bank would be fined $185 Million for an illegal scheme, which involved the creation of millions of fake accounts in order to generate artificial fees. The craziest part of the whole saga isn’t the size of the fine that Wells is facing, it’s the number of employees involved in the racket. Just two weeks ago, over 5,000 employees (!) were fired for their involvement in the practice that was consummated out of the need to meet performance quotas.

Sidenote: I have a sneaking suspicion that some of the 5,000 in firings had nothing to do with the illegal scam, and were simply grouped into the pool of dismissals in order to hide the fact that Wells Fargo might be reducing its number of employees. But shhhhhh…. 

Speaking of fines, peep this graphic:


Bank fines.png


Not only has J.P Morgan surpassed Wells Fargo as the largest investment bank by market cap, but the firm has also managed to do this while experiencing over triple the $ value of fines, following the Great Recession. While market cap and regulatory fines aren’t exactly correlated to each other, JPM’s story is pretty damn impressive.

J.P. Morgan really knows how to take one on the chin. I guess you could say Jamie Dimon is a modern-day financial Rocky Balboa? 


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