JP Morgan cuts office space and warns of Brexit relocation

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The head of global investment bank JP Morgan has told shareholders the firm could cut office space by more than a third in coming years as some staff at the investment bank shift permanently to working at home.

Chief executive Jamie Dimon wrote in his annual letter to shareholders that the bank was expected to need just 60 seats per 100 people in future and new practices would “significantly reduce our need for real estate”.

He said he expected “many” of the firm’s 255,000 staff to return to office locations full time, with some working under a hybrid model and about 10% of employees in “very specific roles” working from home completely. Construction of the company’s new New York HQ would continue, he said.

Brexit fears

Dimon warned that the bank may have to consider moving UK operations to Europe because of Brexit – a statement of particular interest to its 19,000 employees at offices in London, Bournemouth, Glasgow and Edinburgh.

London is the headquarters of JP Morgan’s Europe and Middle East region while the Bournemouth site is thought to be the largest private sector employer in Dorset.

Dimon said there were many issues yet to be resolved in the UK’s new relationship with Europe, which “has had, and will continue to have, the upper hand” in Brexit negotiations.

How many roles at the bank were to be moved out of the UK depended on how it is eventually agreed financial services will operate, he said.

“We may reach a tipping point many years out when it may make sense to move all functions that service Europe out of the United Kingdom and into continental Europe,” Dimon wrote, adding that Brexit would hurt the UK’s long-term economic prospects.

In the US he called for measures to reduce inequality such as raising the minimum wage, increasing taxes on the wealthy and eliminating tax breaks that benefit private equity firms and private jets.

“Many of our citizens are unsettled, and the fault line for all this discord is a fraying American dream – the enormous wealth of our country is accruing to the very few. In other words, the fault line is inequality,” he said.

Other finance firms altering working practices include HSBC, which has told 1,200 call centre staff in the UK they can work from home permanently, and Lloyds Banking Group which in February announced it was to reduce its office space by 20% over two years. The decision was taken after three-quarters of Lloyds’ 68,000 employees had said they wanted to work from home for three or more days a week in future.

Archbishop intervenes

Meanwhile, a proportion of Goldman Sachs’ UK staff are thought this week to have been returning to their offices for the first time since the initial 2020 lockdown.

About 200 of the US investment bank’s workers could return to the main London office from Tuesday, joining several hundred staff who have been at their desks throughout the various lockdowns through the need to use specialised computers and software. Goldman Sachs employs about 6,000 workers in London overall.

Goldman’s chief executive, David Solomon, has described working from home as an “aberration” that must be rectified “as soon as possible”. The bank recently came under fire over long working hours and poor work-life balanced endured by junior staff working at home. Although Soloman said the company was taking the complaints very seriously, it emerged that managers were paying for food hamper deliveries to junior bankers out of their own pockets to help them get through 95-hour weeks.

Now, the Archbishop of Canterbury has weighed in over the long hours question, telling the Financial Times the firm’s attitude over working hours meant that its message was that “nothing matters more than the maximum amount of money we can get”.

He added: “You’ll carry that into ethics of the organisation. You can’t compartmentalise and say, I’m going to make you work a 95-hour week, because we’ve got to have more profit, but you’ve got to be really ethical while you’re doing that. Because what you’re asking them to do is not ethical. It’s internally incoherent. I really worry where I see staff working too hard.”

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