The
financiers of household names such as U.S. Steel, General Electric, and
AT&T, not to mention most of America's railroad network, J.P. Morgan is
more than an investment bank—it's an American institution. The firm's founders,
father Junius Spencer Morgan and son J. Pierpont, rose to fame as a powerful
banking team in the second half of the 19th century. Working on both sides of
the Atlantic, the Morgans were responsible for bringing from Europe to the U.S.
the capital that was crucial to the nation's growth. After Junius died in 1890,
J. Pierpont consolidated the family businesses as J.P. Morgan and Company and
reigned as a symbol of Wall Street's power.
The
fifth-largest financial advisor in the world, the company is currently
organized into five business lines: finance and advisory services, market
making activities, asset management and servicing, equity investments, and
proprietary investing and trading. Over the years, J.P. Morgan has transformed
itself from a commercial bank that dealt primarily in big business loans into a
diversified firm that provides a wide variety of services to businesses and
wealthy individuals. The firm has also focused on global development; more than
half of its revenues now comes from outside the U.S and the firm is the leading
merger-and-acquisitions firm in Latin America and the second-largest in Europe.
The globalization of financial markets would seem to bode well in the long run
for J.P. Morgan. However, the economic turmoil in Asia has badly hurt the bank,
which saw its earnings tumble 35 percent in the fourth quarter of 1997 and 44
percent in the first quarter of 1998. In a retrenchment also brought on by
alarmingly high spending, Morgan laid off 5 percent of its staff in 1998, and
put an end to its much-loved free lunch.
-----------------------------------------------------------------------First-class
people
J.P.
Morgan’s mantra, bankers tell us, is "first-class people doing business in
a first-class way." Translation: an emphasis on civility and teamwork, with
a touch of old-school elitism and bureaucracy. One analyst in the firm’s equity
research department describes the firm as "very corporate" and
"white collar." Another insider comments on the firm’s "notably
high ethical standards." Says another insider, in the firms fixed-income
department: "It’s somewhat conservative, extremely politically correct,
and very elite." However, one associate says this reputation is
overstated: "It’s professional, but not as haughty as is sometimes
thought."
Insiders
agree that J.P. Morgan is "on the friendly end of the Wall Street
spectrum." There’s "very little petty office politics." Comments
an associate in investment banking: "It’s generally very inclusive and
team-oriented. There’s not much backstabbing. Managing directors and vice
presidents are concerned about developing junior people."
But in
this imperfect world, even Morgan’s emphasis on teamwork is considered an
outmoded drawback by some. Says one analyst: "The team environment
sometimes leads to failure to recognize those working harder or on more
advanced assignments." An associate in investment management agrees:
"The consensus-driven approach makes accountability and contrarian
thinking difficult to achieve." Says one I-banking analyst: "[J.P.
Morgan] is friendly and cooperative, but it can become too entrenched in its
own history at times and not aggressive enough." And, says one associate
in sales: "The only think that really bugs me is that we tend to keep weak
people circulating in-house rather than aggressively firing those not up to
par."
-----------------------------------------------------------------------Excellent
treatment by supervisors
While
the emphasis on teamwork at Morgan may have its drawbacks, insiders say it
leads to excellent treatment by supervisors and a focus on the development of
junior employees. While long-time employees say that newcomers "earn
respect as they gain experience," they also say that "most older
employees are willing to mentor new arrivals." "They treat me with
respect at all times," says one I-banking analyst. "I’m constantly
challenged to take on more work and responsibilities." Says another
I-banking analyst: "Morgan’s supervisors will treat you based on maturity
and ability – not by tenure. I’ve always felt essential to the team. Sums up
one analyst-turned associate: "The ‘teamwork’ pitch the recruiters gave is
very true here – it seems like everyone has a vested interest in your
development."
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JP Morgan's plans for American Century Funds,
the gigantic mutual fund company Morgan purchased in 1997
Why JP Morgan was among the first commercial
banks that was allowed to underwrite securities
Why despite its late start JP Morgan has
become one of the top 10 securities underwriters on Wall Street, ranking #6 in
total U.S. stock and bond writing and #8 in municipal underwriting for the
first 9 months of 1997
Why JP Morgan is known for having an
especially lengthy and drawn out interview process
Why JP Morgan is considered the most
progressive and diverse firm on Wall Street