JPMorgan Chase, the largest US bank by assets, is moving its head of investment banking coverage from New York to Hong Kong as part of a push into Asia and a wider sign of western banks looking east for growth.
Jeff Urwin will continue to run worldwide capital markets and mergers and acquisitions from his new office in Hong Kong in a rare example of a western bank basing a global investment banking job in Asia.
“We’ve never done something like this where we’ve taken the head of one of the major businesses in the bank and moved it to Asia,” said Jes Staley, chief executive of JPMorgan’s investment bank. “That type of role has usually been based in New York and occasionally in London.”
“It’s a very significant statement that the client business is increasingly global and that Asia is increasingly a place of interest – for clients based in Asia and for European, American and Latin American clients expanding into the region,” he said.
It might be the source of growth for the future, with bankers expecting more cross-border dealmaking from the likes of India’s Tata, China’s Geely and a host of Japanese companies. But Asia has recently proven a difficult market for US banks, including JPMorgan.
Bankers complain about lower bonuses and restrictions on travel for many but the key moneymakers after equity and M&A activity slumped in the second half of last year and failed to recover so far this year, although debt markets have seen record activity.
JPMorgan’s own Asian investment banking revenues in the first quarter were down 32 per cent versus the same period last year, but other banks that split out regional revenues saw different results.
Morgan Stanley’s Asia business turned in the strongest regional revenue growth, while Citicorp’s securities and banking division in Asia was its second-best performer with 17 per cent revenue growth.
However, US banks are seen by some as having a competitive advantage, partly better of access to dollar funding than European and local players – the US currency dominates capital market and cross-border trade activity in the region.
Equity capital markets has been a source of fees in the past decade, driven partly by large Chinese listings. Haitong Securities last year became the biggest initial public offering this year in a share sale underwritten by JPMorgan.
Mr Urwin, a 56-year-old who was born in England and holds British and US citizenship, acknowledged that the market had slowed, though said: “There is a pretty strong pipeline. The question is whether investors step up.”
The wisdom of trying to run from Hong Kong a business that is still dominated by US companies is still up for debate. Bankers speculated that the timezone difference made it very difficult to do.
Mr Urwin adds the title of chief executive of Asia Pacific, succeeding Gaby Abdelnour, who has announced he is leaving the bank. Along with Barry Sommers, who runs wealth management, Mr Urwin is the leading survivor from Bear Stearns, which JPMorgan acquired in a rescue purchase during the financial crisis.