Jamie Dimon Just Spent His Salary to Buy Shares in JPMorgan Chase & Co
Here is the opening of this interesting report from Bloomberg:
Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., spent $26.6 million to buy shares of his bank Thursday after they tumbled to the lowest price in more than two years.
Dimon, 59, bought 500,000 shares, bringing his total holding to 6.75 million shares, according to a regulatory filing. He made the purchase because he believes the stock is cheap after a worldwide rout in equities, according to a person with knowledge of his thinking. JPMorgan, the largest U.S. lender by assets, fell 20 percent this year through the end of regular trading in New York.
Other global banks including Citigroup Inc., Bank of America Corp., Credit Suisse Group AG and Deutsche Bank AG have all plunged more than 32 percent. JPMorgan climbed 3.6 percent to $55 at 7:48 a.m. in early trading on news of Dimon’s purchase and as equities rallied globally.
Executives can sometimes shore up confidence in their firms after purchasing shares in the open market. Citigroup CEO Michael Corbat and Chairman Michael O’Neill each bought about $1 million of their bank’s shares on Jan. 22 after they fell to the lowest in more than three years, and the stock has tumbled 15 percent since. On Thursday, Citigroup Chief Financial Officer John Gerspach purchased 13,000 shares for about $489,000, according to a filing.
Is this a bellwether moment for bank shares?
Quite possibly for JPMorgan Chase and other US bank shares (S5BANKX), which are now medium-term recovery candidates. However, banks in Japan (TPNBNK) and Europe (SX7E) face a different problem, although their recent climactic slumps suggest that lows of at least near-term significant are close to hand.
Unfortunately, the European Central Bank and now the Bank of Japan have negative interest rate policies. Consequently, EU banks, which may not have the balance sheet strength of the US financial sector, and also Japanese banks are finding it even more difficult to make profits. This is an unfavourable environment, as the charts above show. The ECB and BoJ will have to rethink their negative rate policies, which also undermine confidence in their regions, before their banking sectors can recover. Fiscal stimulus from their respective governments would also help.
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