| NEW YORK, April 9
NEW YORK, April 9 Jamie Dimon, CEO of JPMorgan
Chase & Co, said that settling the big bank's
wide-ranging legal cases with multiple government agencies last
year was "the most painful, difficult and nerve-wracking
experience that I have ever dealt with professionally."
In a 30-page annual letter to shareholders released by the
company on Wednesday, Dimon made the comment as he took another
step toward putting behind him the issues that cost the company
more than $20 billion.
"We thought the best option, perhaps the only sensible
option," Dimon wrote, "was to acknowledge our issues and settle
as much as we could all at once, albeit at a high price."
But Dimon, 58, appeared to bite his tongue from sharing any
further thoughts on how the company was targeted by prosecutors.
"There is much to say and a lot to be learned in analyzing what
happened, but I am not going to do so in this letter - more
distance and perspective are required."
Dimon also provided more details on the $2 billion of
additional annual spending by the company to comply with new
rules and regulations.
JPMorgan will have added 13,000 employees through the end of
2014 since the beginning to 2012 for regulatory compliance and
risk control, Dimon said. The company employed about 251,000
people at the end of December.
Some 8,000 employees are now dedicated solely to combating
money laundering, Dimon said. The company was sanctioned last
year by regulators for its weak system to thwart money
laundering. Dimon acknowledged in the letter that JPMorgan
executives previously had been too self-assured when they had
seen competitors get in trouble with regulators over their
"Our response generally was, 'We know what we're doing.'
Well, we should have done more self-examination. We need to be
better listeners and do a better job at examining critiques of
others so we can learn from other people's mistakes, too," he
JPMorgan, the biggest U.S. bank by assets, has spent more
than $600 million on technology for the compliance and control
push. It has built what Dimon called a "state-of-the-art control
room in our corporate headquarters to provide streamlined data
analysis and reporting capabilities."
Beyond JPMorgan's regulatory troubles, Dimon took up a wide
range of topics, including interest rate risk, cyber attacks and
stock performance. He also warned of three looming threats to
the company beyond its usual competitors: large, global Chinese
banks, technological obsolescence and non-bank financial
companies that operate largely outside of current bank
Four Chinese banks are following rapidly growing Chinese
companies overseas, he said. As examples of non-bank
competitors, he cited the PayPal business of eBay Inc,
money market funds, real estate investment trusts and
middle-market loan funds.
Dimon said he looks forward to interest rates rising from
their currently low levels, which he expects will boost JPMorgan
profits. But he cautioned, "When rates do normalize, we know one
thing for certain - it will happen differently from what people
expect. And my guess is that when it happens, it will be faster
than people expect."
The bank is increasingly worried about cyber attacks, which
he said are becoming more complex and dangerous. By the end of
this year, JPMorgan's annual spending on cyber security will
increase to more than $250 million, from $200 million in 2012,
and staffing will rise to 1,000 people from 600 people. "This
effort will continue to grow exponentially over the years," he
(Reporting by David Henry; Editing by Ken Wills)