Jamie Dimon, the fast-talking head of US banking giant JP Morgan of almost two decades, didn’t mince his words when asked at a Department of Finance event on Thursday for business and policy leaders about the state of the Democratic Party.
“I have a lot of friends who are Democrats, and they’re idiots,” said the 69-year-old. “I always say they have big hearts and little brains. They do not understand how the real world works.”
“They’re very ideological,” he said, as part of a broad-ranging discussion that spanned financial markets (they’re too complacent about Trump’s administration reaching trade deals, he reckons) to artificial intelligence.
Dimon – the go-to for US authorities when looking for a rescue buyer for ailing banks during times of crisis, having taken on Bear Stearns and Washington Mutual in 2008 and, more recently, California’s First Republic Bank – feels he’s earned the right to be heard on subjects outside his bailiwick.
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His latest annual letter to shareholders, published in April, took aim at the likes of uncontrolled immigration, “incompetent government”, culture wars, and the US’s education and healthcare systems.
On a tour of some JP Morgan operations in Europe this week, Dimon had no problem securing private audiences with Italy’s prime minister Giorgia Meloni, German’s new chancellor, Friedrich Merz, and Taoiseach Micheál Martin.
What European banker could get such access?
Certainly not the one who would see himself as Europe’s answer to Dimon – Andrea Orcel, chief executive of Unicredit, Italy’s second largest bank.
Orcel, a suave, brash, 61-year-old, who spent most of his career in investment banking, has set his sights on turning Unicredit into a European banking champion since he took charge four years ago.
It would be in line with the European Central Bank’s (ECB) ambition of having stronger pan-European banks to boost the resilience of the sector with more diverse earnings – hoping that tougher regulation and bail-in tools since the financial crisis offer protection against the obvious too-big-to-fail risks.
The ECB’s former president, Mario Draghi, highlighted in his landmark report last year on EU competitiveness that part of the problem is the fragmented, traditionally less profitable European banking landscape, with lack big European players compared to their US.
JP Morgan, the world’s largest most valuable bank with a market capitalisation of $800 billion (€684 billion), is more than six times the €107 billion value of Spain’s Santander, the largest in the euro zone. UniCredit and Italian peer Intesa Sanpaolo are hovering around €90 billion.
Orcel has ruffled feathers in European capitals to make his mark.
Last September, he caught the German establishment off guard when he revealed he had quietly built up a 9 per cent stake in Commerzbank, the country’s second largest bank and key finance provider to its SMEs. Berlin unwittingly handed half the stake to him when it sold down its Commerzbank stake on the market.
The disclosure prompted a backlash from politicians, businesses and unions – wary of how Unicredit had cut two thirds of the jobs and hundreds of branches at German regional bank HypoVereinsbank since it bought the then struggling lender in 2005 to boost profitability. Then chancellor Olaf Scholz slammed the move as “an unfriendly attack”.
Undeterred, Orcel accumulated financial derivatives over the following three months entitling him to buy a further 21 per cent of Commerzbank. But, by then, he had also launched an all-share bid for smaller Milan rival, Banco BPM – a bank Orcel had previously run the rule over in 2022. Here, too, he encountered political resistance, with Meloni’s government, which is more keen creating a third banking force through tie-ups below Unicredit and Intesa Sanpaolo, the country’s largest bank.
Rome has used so-called golden powers to impose conditions on Orcel’s bid for Banco BPM – including a stipulation that Unicredit halt activities in Russia, where it and Austria’s Raiffeisen are the two main remaining Western lenders. Vladimir Putin’s officials, however, are making it difficult to reverse out of that market by imposing stiff discounts and exit taxes on asset sales by business from “unfriendly” countries.
Unicredit’s designs on Banco BPM are at a critical juncture. Its court appeal against the imposition of the “golden power” was heard this week and a decision on that is due by next Wednesday. The European Commission is also raised concerns about Rome’s heavy-handedness. Unicredit’s bid – now valued at €14.5 billion – is currently set to exposure on July 23rd.
Orcel issued a reminder to Berlin this week that he hasn’t gone away – more than doubling its equity stake in Commerzbank to about 20 per cent by converting some of its derivative contracts. UniCredit said it also plans to convert the remaining 9 per cent it holds in derivatives without specifying when.
The hostile move triggered an obvious response. Germany’s finance ministry reiterated a rejection of Unicredit’s “uncoordinated and unfriendly” approach, ruling out a sale of the state’s remaining 12 per cent stake in Commerzbank. A near-term bid is unlikely as the immediate focus is on Banca BMP. A more than doubling of Commerzbank’s share price since last September also makes it difficult for Orcel to make an outright offer at these levels and achieve his minimum 15 per cent return on investment on deals, according to analysts.
To be sure, Unicredit, which has a decent presence across central and eastern Europe, has had a friendlier reception elsewhere of late. A move to double its take in Greece’s Alpha Bank to 20 per cent – and plan to increase it further to just under 30 per cent – in May has been warmly welcomed by the government and regulators in Athens.
Some might see Orcel’s aggressive approach elsewhere as necessary to breaking down barriers. But it risks stoking banking nationalism across Europe – making it harder in future for other would-be consolidators.
