JP Morgan Chase 2015 Annual Report Download - page 173

JPMorgan Chase & Co./2015 Annual Report 163
Short-term funding
During the third quarter of 2015 the Firm completed the
discontinuation of its commercial paper customer sweep
cash management program. This change has not had a
significant impact on the Firm’s liquidity as the majority of
these customer funds remain as deposits at the Firm.
The Firm’s sources of short-term secured funding primarily
consist of securities loaned or sold under agreements to
repurchase. Securities loaned or sold under agreements to
repurchase are secured predominantly by high-quality
securities collateral, including government-issued debt and
agency MBS, and constitute a significant portion of the
federal funds purchased and securities loaned or sold under
repurchase agreements on the Consolidated balance sheets.
The decrease in securities loaned or sold under agreements
to repurchase at December 31, 2015, compared with the
balance at December 31, 2014 (as well as the average
balances for the full year 2015, compared with the prior
year) was due to a decline in secured financing of trading
assets-debt and equity instruments in CIB. The balances
associated with securities loaned or sold under agreements
to repurchase fluctuate over time due to customers’
investment and financing activities; the Firm’s demand for
financing; the ongoing management of the mix of the Firm’s
liabilities, including its secured and unsecured financing (for
both the investment securities and market-making
portfolios); and other market and portfolio factors.
Long-term funding and issuance
Long-term funding provides additional sources of stable
funding and liquidity for the Firm. The Firm’s long-term
funding plan is driven by expected client activity, liquidity
considerations, and regulatory requirements. Long-term
funding objectives include maintaining diversification,
maximizing market access and optimizing funding costs, as
well as maintaining a certain level of liquidity at the Parent
Company. The Firm evaluates various funding markets,
tenors and currencies in creating its optimal long-term
funding plan.
The significant majority of the Firm’s long-term unsecured
funding is issued by the Parent Company to provide
maximum flexibility in support of both bank and nonbank
subsidiary funding. The following table summarizes long-
term unsecured issuance and maturities or redemptions for
the years ended December 31, 2015 and 2014. For
additional information, see Note 21.
Long-term unsecured funding
Year ended December 31,
(in millions) 2015 2014
Issuance
Senior notes issued in the U.S. market $ 19,212 $ 16,322
Senior notes issued in non-U.S. markets 10,188 11,193
Total senior notes 29,400 27,515
Subordinated debt 3,210 4,956
Structured notes 22,165 19,806
Total long-term unsecured funding –
issuance $ 54,775 $ 52,277
Maturities/redemptions
Senior notes $ 18,454 $ 21,169
Trust preferred securities 1,500 —
Subordinated debt 6,908 4,487
Structured notes 18,099 18,554
Total long-term unsecured funding –
maturities/redemptions $ 44,961 $ 44,210
The Firm raises secured long-term funding through
securitization of consumer credit card loans and advances
from the FHLBs.
The following table summarizes the securitization issuance
and FHLB advances and their respective maturities or
redemption for the years ended December 31, 2015 and
2014.
Long-term secured funding
Year ended
December 31, Issuance Maturities/Redemptions
(in millions) 2015 2014 2015 2014
Credit card
securitization $ 6,807 $ 8,327 $ 10,130 $ 3,774
Other securitizations(a) ——248 309
FHLB advances 16,550 15,200 9,960 12,079
Other long-term
secured funding 1,105 802 383 3,076
Total long-term
secured funding $ 24,462 $ 24,329 $ 20,721 $ 19,238
(a) Other securitizations includes securitizations of residential mortgages
and student loans.
The Firm’s wholesale businesses also securitize loans for
client-driven transactions; those client-driven loan
securitizations are not considered to be a source of funding
for the Firm and are not included in the table above. For
further description of the client-driven loan securitizations,
see Note 16.