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A proud history The financiers of household names such as U.S. Steel, General Electric, and AT&T, J.P. Morgan is more than an investment bank - it's an American institution. The firm's founders, father Junius Spencer Morgan and son J. Pierpont, rose to fame as a powerful banking team in the second half of the 19th century. Working on both sides of the Atlantic, the Morgans were responsible for bringing capital from Europe to the U.S. that was crucial to the new nation's growth. After Junius died in 1890, J. Pierpont consolidated the family businesses under the name J.P. Morgan and Company and commenced a reign as a symbol of Wall Street's power. Still outside the inner sanctum Despite its hallowed name, J.P. Morgan still hasn't made it into the highest echelon of the investment banking elite. The firm has for years attempted to transform itself from a commercial bank into an investment bank. Unlike other large commercial banks, such as Bank of America and Deutsche Bank, which have built their I-banking practices by acquiring firms, traditional Morgan has decided to grow its business from within. In 1999, for example, the firm recruited a significant number of experienced bankers - 33 in the first seven months of the year, to be exact. Firm officials and Wall Street analysts cite Morgan's ability thus far to transform itself - the firm ranks respectably in league tables - as an astounding story of successful restructuring. In 1980, about 50 percent of the bank's revenue came from traditional commercial banking businesses such as corporate lending; nowadays, 75 percent comes from investment banking business such as trading and underwriting. Industry observers point to the firm's folding its lending operation into its fixed-income trading business in December 1997 as symbolic of this change. Some struggles But while Morgan has been successful in its transformation, the bank hasn't been utterly triumphant. J.P. Morgan has taken huge financial hits recently, especially in the fourth quarter of 1997 and the first quarter of 1998, when earnings fell 35 and 48 percent, respectively. Part of the reason for the faltering profits is that Morgan had invested heavily in Asia, where financial crisis eviscerated local banks. In response, the firm has reduced exposure in some markets and looked for ways to cut spending. It announced a 5 percent cut in staff in February 1998, and also began to trim fat elsewhere, most notably by axing the firm's free-lunch policy. In May 1998, the firm announced that it planned to slash between $300 million and $500 million in costs annually and to invest some savings in growth areas. An outstanding 1999 All of the firm's efforts, plus an outstanding economic boom, produced some fine results in 1999. Morgan reported net income of $2.1 billion for the year compared to $963 million in 1998. It also reported ROE of 18.4 percent for 1999. The firm advised BP in its $55 billion merger with Amoco and is advising Exxon on its $86 billion merger with Mobil, the largest deal ever. The firm has also shown improving performance in the high margin equity underwriting business. But it hasn't just been big business that has meant increased earnings - as promised, the firm's management has slimmed down Morgan's expenses. Global leader As the BP/Amoco transaction suggests, Morgan has had success in international markets. The firm managed to capture a substantial piece of the $3.4 trillion worth of M&A activity worldwide. JP Morgan ranked No. 4 in Europe for M&A (behind the Big 3: Goldman Sachs, Morgan Stanley, and Merrill Lynch). While Morgan is strong in Europe, in Latin America it is the clear leader, with industry-leading franchises in debt underwriting, M&A advisory, equity and fixed income research, and derivatives. Courtroom drama In August 1999 a federal judge unsealed a $735 million lawsuit leveled at Morgan. The suit, filed by Japanese trading company Sumitomo, alleges that Morgan lent money to a rogue trader in Sumitomo's employ and then demanded restitution at usurious rates. Sumitomo contends that neither the loans themselves nor the payments back to Morgan were on the up and up. Officials at J.P. Morgan have sworn to fight the charges, claiming that Sumitomo is merely attempting to pass the buck.
Like the bank itself, Morgan's recruiting process has changed dramatically in the past decade or so. The firm's different divisions recruit separately (rather than relying on a cumbersome and less focused unified recruiting effort). Also, although the firm doesn't generally shell out huge signing bonuses to attract name-brand Wall Street talent, the firm no longer limits its hiring to recent graduates. Clayton Rose, who heads Morgan's Equities business group, told The Wall Street Journal recently: "We have become comfortable with the notion that loyalty doesn't only come from being born and bred here." J.P. Morgan has extensive recruiting literature on its web site, located at www.jpmorgan.com. Also, the firm recruits at 35 undergraduate schools and 12 business schools. For business schools, there is typically one big presentation. After that initial presentation, Morgan's individual business groups often go back to the campus to make smaller presentations. These are generally club-sponsored; the firm's asset management division, for example, will be sponsored by a school's investment management club. Sometimes the firm holds brown bag lunches or cocktail presentations. For lucky schools, such as UCLA, there are Morgan beer busts. Morgan also hosts dinners at the major business schools. "The goal is to get to know you," explains one recruiter. These dinners are usually held one to two months before interviewing begins. There's also an "after offer" dinner for offerees. At undergraduate colleges, the dinner is usually held for invited interviewees at the firm's target schools. This policy varies by business (sometimes dinners are only for candidates who have received an offer). Candidates applying to Morgan through the firm's on-campus recruiting efforts go through the process of a lengthy on-campus interview and then a full day of callbacks at the firm's New York headquarters. (For summer hires, the second round is held locally.) The firm's investment banking department does a "Super Saturday," when many candidates are brought to the headquarters to run the gauntlet of interviewing. A candidate usually interviews with five to eight people during the second round. MBAs who get offers are asked back for sell days, when they meet members of the group who schmooze with them in hopes of getting them to sign up. Most new hires are brought aboard at New York City, London, Brussels, Singapore, and Tokyo.
First-class J.P. Morgan's mantra, bankers tell us, is "first-class business in a first-class way." Translation: an emphasis on civility and teamwork, with a touch of old-school elitism and bureaucracy. One analyst in the firm's equity research department describes the firm as "very corporate" and "white collar." Another insider comments on the firm's "notably high ethical standards." Says another insider, in the firm's fixed-income department: "It's somewhat conservative, extremely politically correct, and very elite." However, one associate says this reputation is overstated: "It's professional, but not as haughty as is sometimes thought." Insiders agree that J.P. Morgan is "on the friendly end of the Wall Street spectrum." There's "very little petty office politics." Comments an associate in investment banking: "It's generally very inclusive and team-oriented. There's not much backstabbing. Managing directors and vice presidents are concerned about developing junior people." But in this imperfect world, even Morgan's emphasis on teamwork is considered an outmoded drawback by some. Says one analyst: "The team environment sometimes leads to failure to recognize those working harder or on more advanced assignments." An associate in investment management agrees: "The consensus-driven approach makes accountability and contrarian thinking difficult to achieve." Says one I-banking analyst: "[J.P. Morgan] is friendly and cooperative, but it can become too entrenched in its own history at times and not aggressive enough." And, says one associate in sales: "The only thing that really bugs me is that we tend to keep weak people circulating in-house rather than aggressively firing those not up to par." Diverse by Wall Street standards The opportunities for both women and other minorities at Morgan is "surprisingly good for this business," employees say, emphasizing J.P. Morgan's "excellent gender diversity." Reports one I-banking analyst: "I work in a very diverse group - several different races and good representation of women." One insider comments that "there certainly are more women here than at any other Wall Street firm - Morgan puts a big effort forward in this area, and it?s definitely paying off for them." Reports one supervisor: "I supervise a group of all women." Says an associate in investment banking: "The head of my group is a woman and almost half of all junior personnel are women." But Morgan is still on Wall Street, and some women believe their opportunities could be improved. "The firm appears to try and reach out to women in hiring for junior positions, but there are very few women in leadership positions, or in positions to mentor or support young women," reports one woman analyst. One woman associate says that while receptivity to women is "very good," "it becomes increasingly difficult to rise to the "next level" with each promotion. While this is true of men, too, I think it is more pronounced for women." As for ethnic and other minorities, "J.P. Morgan's diversity efforts are known by all employees," says one vice president. The firm has a Diversity Steering Committee, (DSC), which is a group of managing directors from each business group who oversee the diversity issues affecting the firm on a global basis. One insider reports: "If you're a minority and you want to leave the job, they'll sit you down for an interview to try to find out what it was that made you want to leave this place." Two of Morgan's three vice chairmen are foreign born. One managing director even lives in South Africa and actively trains locals for careers in business. And Morgan is a leader when it comes to gays and lesbians, too. In August 1997, Morgan announced same-sex domestic partner benefits, the first Wall Street firm to do so. The firm has brought in speakers like Allen Gilmour, a retired vice chairman of Ford Motor, to speak to employees about being openly gay in the workplace. One analyst puts it simply: "Morgan has a huge diversity initiative." On the low-end for the Street, but c'mon? Insiders say Morgan is known for being on the low end of pay on the Street; contacts suggest that the firm's prestige and job satisfaction allow it to get away with paying salaries below those of competitors. One employee comments: "There's a rumor going around that so far has proven to be pretty true, that if you take a job at, say, Salomon Smith Barney, you'll get paid more than at J.P. Morgan because Morgan has a better reputation. So with Salomon, it's more of a recruiting effort than anything else." Says one associate in investment management: "Morgan is on the low end, and buy-side is lower than sell-side, but there's a fair amount of predictability and stability." Says one young VP: "I was worried that at J.P. Morgan I would not be paid as much, and I believe I am underpaid compared to my peers at other firms, but I love my job and don't want to work anywhere else." The firm reports that its starting salaries are competitive, and that starting salaries are reviewed continuously for benchmarking purposes. And it's not as if bankers at Morgan are going hungry. Although first-year salaries are sometimes called "a bit low," insiders say they are on par with "industry averages, if you consider your signing bonus." Says one second-year analyst in investment banking, earning nearing $90,000 in total compensation: "I'm not sure how this compares to other Wall Street firms, but straight out of college, I couldn't expect much more." And the third year of working with J.P. Morgan is "the payoff, because that's when profit sharing kicks in." Afterwards, analysts say, "increases depend on whether or not you make associate." If you do, "expect to be pushed way up the pay scale." One associate in sales and trading reports expecting to make $120,000 in his first year, describing his compensation as the "standard top-tier Wall Street package." One associate just beginning his third year in the firm's M&A group reports expecting to make $280,000. Another in the same group expects to make $300,000. (That associate remarks: "Although it is a lot of money, you earn it.")
Nancy Baird Harwood Human Resources (212) 648-9909
Chase Manhattan;Credit Suisse First Boston;Deutsche Bank;Donaldson, Lufkin & Jenrette;Lehman Brothers;Merrill Lynch;Morgan Stanley Dean Witter;Salomon Smith Barney More Company Profiles For more career information, go to Vault.com ©2000, Vault.com Inc
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