A Massive Bank Says It’s Now Running Out of Branches

January 8, 2024

A massive bank says it’s now running out of branches to close as it has already optimized much of its current network.

JPMorgan Chase is being left with “less and less accretive opportunities to consolidate,” Marianne Lake, co-CEO of JPMorgan’s consumer and community banking unit, said Tuesday at a Goldman Sachs conference.

The update comes after years of regular branch closings by JPMorgan, its big-bank counterparts and various regional banks.

As consumer and commercial customers adopted online banking and financial institutions searched for ways to control expenses in recent years, banks embraced branch consolidation.

A decline in branch visits during the COVID-19 pandemic and a number of major bank mergers in 2021 and 2022 sped up the consolidation process, reports American Banker.

The number of bank branches in the U.S. fell to 79,000 at the end of 2022, according to S&P Global Market Intelligence data.

That was down from about 100,000 branch locations in 2009, the last year on record when the total number of branches increased.

But JPMorgan is one of a handful of large banks where the branch count has increased in recent years — ticking up from 4,854 branches in September 2021 to 4,863 in September 2023, according to regulatory filings.

The banking giant plans to keep adding branches at a rate of about 150 per year, Lake said Tuesday.

“Over time, you’ll see our network generally be flat to up, but we’re going to keep adding in areas where we think the opportunity is there to do it,” Lake said.

Despite their short operating histories, the branches added to JPMorgan’s network between 2017 and 2023 have delivered about $85 billion of deposits so far, Lake said Tuesday.

Nevertheless, JPMorgan still has some branch consolidation on the horizon, says American Banker.

Also Read: A Massive US Bank is Now Closing Credit Cards

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A massive bank now files for unexpected bankruptcy after declaring a shortfall of as much as $36.4 billion in November.

The Chinese shadow bank Zhongzhi told its investors it was “severely insolvent”.

Its wealth management arm came under police investigations days later, reports BankingDive.

The bank made a statement Friday from Beijing’s First Intermediate People’s Court, which accepted its application for liquidation.

Zhongzhi said it “obviously” lacked the ability to repay its debts, according to the statement, seen by Bloomberg.

In November, the bank declared a shortfall of as much as $36.4 billion and told investors, in an open letter, that it was “severely insolvent,” adding that management had “run wild” after the 2021 death of the firm’s founder, Xie Zhikun, per FT.

Zhongzhi’s collapse exposes potential flaws in China’s $2.9 trillion trust sector, a loosely regulated gray area of the financial system that offers investment products to wealthy individuals and businesses.

The sector is a crucial source of alternative for its borrowers, which include real estate developers and local governments, reports BankingDive.

The Chinese government, in recent years, has ramped up pressure to reduce trust funds’ exposure to real estate.

Chinese trust companies’ exposure to property in the second quarter of 2023 sank to 6.7%, from 15% in 2019, the Financial Times reported, citing research from Natixis.

Zhaopeng Xing, a senior China strategist at ANZ, told The Wall Street Journal the risk of contagion from Zhongzhi has passed, adding that accountants have spent months going through the company’s books and quantifying its risks.

But Xiaoxi Zhang, an analyst at Gavekal Dragonomics, said knock-on impact is still a possibility.

“Domestic investor sentiment may turn even worse, especially for wealthy investors,” she told The Wall Street Journal.

“And of course, other shadow bank institutions are likely to follow suit.”

Also Read: A US Bank is Now Denying Customers Access to Money

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