J.P. Morgan Chase & Co. told an investor briefing Thursday that it would cut about 12,000 jobs as it absorbs Washington Mutual Inc.
The Associated Press, reporting on the investor presentation, said J.P. Morgan Chase (New York; $2 trillion in assets) anticipates saving about $2 billion through its acquisition of WAMU last September. Most of the savings, to be realized this year, $1.35 billion, relate to the job cuts.
Seattle-based WaMu was the largest bank ever to fail in U.S. history. Since J.P. Morgan Chase took over its operations through Feb. 13, WaMu deposits have increased by $500 million, AP said. This follows the withdrawal of $15 billion in deposits during the two weeks in September following the bankruptcy filing of Lehman Brothers Holdings Inc., which led to the WaMu's failure.
Chief Executive Jamie Dimon said he is not predicting, but is ready for: a recession lasting two years; a U.S. unemployment rate above 10 percent; and a 40 percent peak-to-trough decline in home prices. Dimon expects the bank to be profitable throughout 2009, and in line with analyst expectations.
J.P. Morgan Chase has yet to post a quarterly loss during the financial meltdown that began in 2007, when mortgage defaults started spiking. The bank in January reported a modest fourth-quarter profit of $702 million -- thanks mostly to its purchase of Washington Mutual, which boosted its consumer banking business.
J.P. Morgan Chase, like San Francisco-based rival Wells Fargo & Co. ($609 billion in assets), has received $25 billion in government aid—about half of what weaker competitors, such as Citigroup Inc. (New York; $2.1 trillion in assets) and Bank of America Corp. (Charlotte; $2.7 trillion in assets) received.