Jamie Dimon Sets Off a Darwinian Succession Race

When asked over the years about his plans to retire from JPMorgan Chase & Co., Chief Executive Officer Jamie Dimon, in the job since 2006, has elegantly deflected the topic by sticking to a familiar refrain: “In five years.” A reshuffling at the top of the largest U.S. bank announced on Tuesday is the clearest sign yet that Dimon has in fact started the clock on the race to succeed him.

Finding a successor to the only global banking CEO to have made it through both the financial crisis of 2008 and the jolt from the Covid-19 pandemic won’t be easy. Dimon, who’s also chairman, is a formidable force in global finance. Witness the bank’s record quarterly profit this year and its share price as parts of the world rebound from the abyss of the health crisis. Even considering the central bank and regulatory interventions that have supported financial firms in the past year, it’s a remarkable feat.

But the head-to-head competition between two of Dimon’s deputies to succeed him may not be the seamless horse race for the top job in banking that some investors might have liked.

In JPMorgan’s largest management reorganization in years, Daniel Pinto, head of the corporate and investment bank, becomes sole president and chief operating officer after Gordon Smith retires as co-president and co-COO at the end of the year. Challenging Pinto for the top job will be Marianne Lake and Jennifer Piepszak, who immediately succeed Smith as co-heads of the firm’s consumer and community banking. A newly appointed chief financial officer, Jeremy Barnum, who takes over from Piepszak, also gets a chance to prove his abilities should the top job become available.

For advocates of greater diversity in banking, and especially on Wall Street, the apparent confirmation that Lake and Piepszak are still likely candidates for the No. 1 position is welcome news. Among the biggest banks in the U.S., only Citigroup Inc. has a female CEO, and there aren’t too many obvious contenders for other spots because men dominate the senior ranks.

For Piepszak, who was CFO for two years after running the credit-card unit, it’s an opportunity to prove herself managing a large division. Lake, who was CFO for seven years before her, has well-established credentials in the financial community. But pitting the managers head to head at the helm of JPMorgan’s biggest revenue generator — though in keeping with Dimon’s forceful style — sets up a Darwinian race that has the potential to do more damage than good.

For starters, it may be harder to judge Lake’s and Piepszak’s individual contributions, especially from the outside. Lake will run payments, commerce and lending, which includes credit cards, home lending and auto financing, while Piepszak will lead consumer and business banking, as well as wealth management.

What’s more, tension between the two may lead to the temptation of assuming greater risk in the areas they oversee as they try to establish their individual credentials. And while Dimon is still around to ensure the company runs smoothly, competition from within the same business unit will inevitably lead to varying loyalties within the group as individuals will naturally seek to back the winning horse.

And assuming either Lake or Piepszak are promoted to CEO, it’s hard to envisage the one who is passed over will stick around. In short, it’s an aggressive bet that could have been avoided. A number of possible successors have jumped ship over the years, and getting this latest move right will shape Dimon’s legacy.

In the meantime, investors will be reassured that Pinto is not going anywhere. The Argentine banker, who has helped JPMorgan rise to the top of Wall Street’s investment banking rankings, ran the bank along with Smith when Dimon had heart surgery last year. Stepping seamlessly into the top job just as the pandemic hit and markets were going haywire, Pinto showed he’s more than capable of steering the supertanker through troubled waters.

But succession discussions will intensify from here. Few arguably have the experience that has given regulators (and investors) the comfort that Dimon can fill both the institutional role of chairman and the top executive role. A split could well become a hot topic again.

On a recent call with analysts, Dimon, having trouble hearing because of a poor connection, encouraged Piepszak to carry on without him. “You’re doing a great job and don't really need me,” he said. Investors should start getting used to that idea.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.

©2021 Bloomberg L.P.

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