JP Morgan Chase 2015 Annual Report Download - page 42

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VI.ASAFE,STRONGBANKINGINDUSTRYISABSOLUTELY
CRITICALTOACOUNTRY’SSUCCESS—BANKS’ROLES
HAVECHANGED,BUTTHEYWILLNEVERBEAUTILITY
For the people of a country to thrive, you
need a successful economy and markets. For
an economy to be successful, it is an absolute
necessity to have a healthy and successful
banking system. The United States has a
large, vibrant financial system, from asset
managers and private equity sponsors to
hedge funds, non-banks, venture capital-
ists, public and private market participants,
small to large investors and banks. Banks are
at the core of the system. They educate the
world about companies and markets, they
syndicate credit and market risk, they hold
and move money and assets, and they neces-
sarily create discipline among borrowers and
transparency in the market. To do this well,
America needs all dierent kinds of financial
institutions and all dierent kinds of banks –
large and small.
There is a great need for the services of all
banks, from large global banks to smaller
regional and community banks. That said,
our large, global Corporate & Investment
Bank does things that regional and commu-
nity banks simply cannot do. We oer
unique capabilities to large corporations,
large investors and governments, including
federal institutions, states and cities.
Only large banks can bank large institutions.
Of the 26 million businesses in the United
States, only 4,000 are public companies.
While accounting for less than 0.02% of all
firms, these companies represent one-third
of private sector employment and almost
half of the total $2.3 trillion of business
capital expenditures. And most are multi-
nationals doing business in many countries
around the world. In addition to corpora-
tions, governments and government insti-
tutions – such as central banks and sover-
eign wealth funds – need financial services.
The financial needs of all these institutions
are extraordinary. We provide many of
the services they require. For example, we
essentially maintain checking accounts for
these institutions in many countries and
currencies. We provide extensive credit lines
or raise capital for these clients, often in
multiple jurisdictions and in multiple curren-
cies. On an average day, JPMorgan Chase
Does the United States really need large banks?
moves approximately $5 trillion for these
types of institutions, raises or lends $6 billion
of capital for these institutions, and buys or
sells approximately $1.5 trillion of securities
to serve investors and issuers. We do all this
eciently and safely for our clients. In addi-
tion, as a firm, we spend approximately $700
million a year on research so that we can
educate investors, institutions and govern-
ments about economies, markets and compa-
nies. For countries, we raised $60 billion
of capital in 2015. We help these nations
develop their capital markets, get ratings
from ratings agencies and, in general, expand
their knowledge. The fact is that almost
everything we do is because clients want and
need our various services.
Put “large” in context.
While we are a large bank, it might surprise
you to know two facts: (1) The assets of all
banks in the United States are a much smaller
part of the country’s economy, relatively, than
in most other large, developed countries; and
(2) America’s top five banks by assets are
smaller, relatively, to total banking assets in
America than in most other large, developed
countries. As shown in the following charts,
this framework means banks in the United
States are less consolidated.