February 25, 2020 / 3:45 PM / 3 months ago

JPMorgan gets busy in repo lending after regulatory thumbs up -CFO

NEW YORK, Feb 25 (Reuters) - JPMorgan Chase & Co is putting more cash into overnight lending markets and holding less for a rainy day, after discussing the matter with regulators, the bank’s finance chief said on Tuesday.

The change in approach comes months after a squeeze in short-term lending markets led the U.S. Federal Reserve to step in and provide funding.

JPMorgan executives had complained that capital requirements prevented the bank from financing such loans itself, but regulators have since eased up, Chief Financial Officer Jennifer Piepszak said.

As a result, JPMorgan has decided it can hold less cash for its resolution plan, and instead factor in the possibility that it would use the Fed’s emergency lending facility, known as the discount window.

“We think that this is an important step for us to take to help break the stigma here, and it’s also consistent with the public comments from the Fed,” she told attendees of JPMorgan’s investor day in New York.

Fed officials including Vice Chair Randal Quarles have indicated support for changes that would make it easier for banks to be more involved in overnight lending, also known as repo markets.

JPMorgan, the biggest U.S. bank by assets, is a major player in repo. Its decision to become a more active lender there should help liquidity more broadly, Piepszak said. (Reporting by Matt Scuffham and David Henry in New York Writing by Lauren Tara LaCapra; Editing by Steve Orlofsky)

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