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By Matthew Quinn
Does J.P. Morgan Chase smell blood in the global corporate banking waters? It would certainly appear that way.
The bank is launching a global unit aimed at selling commercial banking services to multinational corporations, the Financial Times reported on Friday.
J.P. Morgan plans to invest more than $100 million in the unit and staff it with 300 bankers. Initially it will focus on fast-growing economies like Brazil, India and China, offering products such as loans, commodities trading and cash management services. The bank will also target the U.K., Germany and Switzerland to start, the FT said.
Considered one of the winners in the financial crisis, J.P. Morgan is trying to take advantage of the weakened position of some of its competitors, particularly Citigroup. Along with HSBC, Citi is the dominant player in the international commercial banking space, with its Global Transaction Service unit having a presence in more than 100 countries.
Greg Guyett, J.P. Morgan's head of Japan who will move to London to lead the new unit, told the FT: "We are doing this now for a couple of reasons... to balance our growth and increase the portion of our revenues that comes from outside the U.S. and from emerging markets in particular; and because, after the crisis, a number of our competitors are challenged."
J.P. Morgan's strategy is to win international clients by using its strong balance sheet to make loans.
Treasury services is an area where J.P. Morgan has lagged behind. Whereas Citi's transaction group increased its income by 12 percent in 2009 to $3.7 billion, J.P. Morgan's income from treasury and securities services fell 31 percent to $1.2 billion last year. Citi's is also a truly global business, with just 9 percent of the unit's $335 billion in deposits and other customer liabilities coming from North America.
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