JPMorgan Chase & Co. (JPM) announced Tuesday it is shuffling the positions of three top executives, in addition to creating the new President of International position. This is part of the company’s strategy to increase its presence in the international market.
 
JPMorgan named Ms. Heidi Miller, head of Treasury & Securities Services (TSS), as the President of International. While Mr. Michael Cavanagh, Chief Financial Officer (CFO). will succeed Ms. Miller as Chief Executive Officer (CEO) of TSS. Mr. Doug Braunstein, head of Investment Banking, Americas, will replace Mr. Cavanagh as CFO.
 
All these appointments are effective immediately and JPMorgan will soon announce the replacement of Mr. Braunstein as head of Investment Banking, Americas.
 
The role of the President of International will be to enhance JPMorgan’s lines of businesses globally, helping them to speed up, focus and prioritize their investments in faster growing economies, such as China, India, Brazil and Russia.
 
Ms. Miller’s role will comprise resourcing and governing lines of business, expanding local branches, seeking growth opportunities in other emerging economies and reducing inefficiency. She will be facing the pressure from recognized international peers such as HSBC Holdings plc. (HBC) and Citigroup Inc. (C) in wholesale banking and cash management. Ms. Miller will also be heading the newly-created International Operating Committee, consisting of JPMorgan’s senior global leaders.
 
Mr. Cavanagh who has served as JPMorgan’s CFO since 2004 will look after TSS, one of the major business units of the company, for further expansion leading to increased revenue and profit.
 
Mr. Braunstein, who has now been appointed as CFO, will also be a member of JPMorgan’s International Operating Committee. He has occupied several senior Investment Banking positions in the company and has aided the company in the advisory business. As a member of the Operation Committee, he will continue to focus on strengthening JPMorgan’s capital strength and liquidity, risk management, loan loss reserve and clear and transparent accounting.
 
JPMorgan has considerably increased its reach in the U.S. market during the financial turmoil, with the acquisitions of Bear Stearns and Washington Mutual. However, high capital requirements and tight regulations slowed the company’s expansion plans, thus, raising the priority of the overseas market.
 
While expanding its geographic presence to enter emerging markets globally in the recent weeks, JPMorgan has announced its foray into the Chinese market through a joint venture with First Capital and proposed to acquire a Brazilian hedge fund, Gávea Investimentos. The company has also received the approval from the European Union (EU) to acquire Royal Bank of Scotland Group plc‘s (RBS) non-U.S. commodities joint venture RBS Sempra Commodities LLP for $1.7 billion.
 
These executive changes are a strategic move and are expected to help JPMorgan acquire more businesses in Asia and Europe, which are the main areas of further growth, as with its world class international business, the company believes that future growth prospects are outside U.S.
 
JPMorgan is currently a Zacks #3 Rank (Hold), implying that the stock is expected to perform in line with the broader U.S. equity market over the next one to three months. While we anticipate continued synergies from the company’s diversification and strong capital position, a pressured credit quality and reduced levels of client activity will drag down future earnings. However, we are impressed to see some improvement in credit quality during the last couple of quarters.  Therefore, we maintain our Neutral recommendation on the stock.
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