JP Morgan Chase (NYSE: JPM) investment banking chief James Staley acknowledged on Thursday that pending regulatory changes that are being considered in Congress has influenced the company’s acquisition strategy.
The admission by Mr. Staley leaves many to believe that the bank may be increasingly concerned by the impact of tougher rules on financial firms. Staley noted at JP Morgan Chase’s “Investor Day” conference that the bank would respond to stricter regulations by passing on extra expenses to its customers and increasing the cost of credit, which could reduce its business lending.
JP Morgan Chase announced last week that it would only be acquiring the European unit of a metals-trading and commodity-trading joint venture between the Royal Bank of Scotland and Sempra Energy, leaving the joint venture’s North American gas and power trading business up for sale to another buyer.
Initially, there were reports that JP Morgan Chase had planned to buy the entire unit for about $4.3 billion a month ago, but when President Obama announced that he had planned to seek to restrict bank holding companies from engaging in proprietary trading, the company changed its plans.
“The assets that we didn’t pursue had a reasonable amount of prop trading in them,” Mr. Staley said at the annual conference in New York. “In this day and age, you have to be mindful for the political environment that you are in, so, yeah, I do think it did have some influence.”
