January 29, 2018 / 9:41 PM / 2 years ago

JPMorgan promotes Pinto and Smith, fueling race to succeed Dimon

NEW YORK (Reuters) - JPMorgan Chase & Co on Monday promoted Daniel Pinto and Gordon Smith to be co-presidents and co-chief operating officers, a move seen as heightening competition for the job of CEO held by Jamie Dimon.

However, Dimon said in a statement he plans to continue in his current role “for approximately five more years”.

Pinto and Smith run JPMorgan’s most prominent businesses, with Pinto, 55, overseeing the corporate and investment banking unit while Smith, 59, runs consumer and community banking.

While their names have been mentioned before as potential successors to Chief Executive Officer Jamie Dimon, their elevation is the clearest signal that planning is actively under way for when he steps aside.

Dimon, 61, has been running JPMorgan since 2005, making him one of just two big bank CEOs who have been in the role since before the 2007-2009 financial crisis. The other is Goldman Sachs Group Inc CEO Lloyd Blankfein, who also has two deputies acting as co-presidents and co-COOs.

The question of who will be succeed Dimon is one of Wall Street’s favorite parlor games, and his eventual departure is something that worries investors who credit him with steering JPMorgan through the financial crisis and turning it into the largest U.S. bank.

“The longer he can stay, the better,” said Walter Todd, president and chief investment officer of Greenwood Capital Associates. “We’ve been a long-time holder of JPMorgan and you could argue he’s probably the best bank CEO in the country.”

Dimon’s plan to stay as CEO for about five more years may provide some relief for shareholders who were worried he might leave to run for political office in 2020, said Brian Kleinhanzl, a bank analyst at Keefe, Bruyette & Woods.

“A small overhang is lifted from shares of JPMorgan,” Kleinhanzl wrote in a note to clients. JPMorgan shares were little changed in after-hours trading.

Shareholders have worried about Dimon’s departure for some time.

When JPMorgan suffered more than $6 billion losses from outsized positions of a trader known as the “London whale” in 2012, there was speculation that Dimon might be forced to leave.

Two years later, Dimon was diagnosed with cancer, for which he was successfully treated.

Just last autumn, there were conflicting reports about whether he would leave to become U.S. Treasury Secretary under President Donald Trump.

More recently, people in political and business circles have wondered whether Dimon will run for U.S. president himself in 2020. It is something he has mused about publicly, though people close to Dimon say he has no intention of hitting the campaign trail.

While Pinto and Smith are now considered front-runners to succeed Dimon, Monday’s promotions do not guarantee that either of them will become CEO.

FILE PHOTO: People pass the JP Morgan Chase & Co. Corporate headquarters in the Manhattan borough of New York City, May 20, 2015. REUTERS/Mike Segar/File Photo

In the past, top JPMorgan executives who were said to be favorites in the CEO race ended up leaving the bank instead.

They include Matt Zames, who had been sole COO until June, as well as Michael Cavanagh, who left to join private equity firm Carlyle Group LP in 2014, and Jes Staley who instead became CEO of Barclays PLC.

Other names cited by sources as potential successors include Chief Financial Officer Marianne Lake, as well as Mary Erdoes, who runs asset management and Doug Petno, who runs commercial banking. In the statement, Dimon thanked them for taking on added responsibilities last year and for supporting company-wide initiatives.

Reporting by David Henry in New York; Writing by Lauren Tara LaCapra; Editing by Clive McKeef

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