JPMorgan Chase chief Jamie Dimon has said the bank will face a $1 billion loss if it winds up its business interests in Russia over the Ukraine war – and warned the invasion could have a significant impact on the country in the coming years world economy and geopolitics will have.
Dimon’s dire prognosis in his annual shareholder letter Released Monday, it was the first time he detailed JPMorgan’s potential losses during the war.
The bank chief warned that the war between Russia and Ukraine and the resulting sanctions against the Kremlin pose a significant challenge that will “at the very least slow down the global economy – and it could easily get worse”.
“We are not concerned about our direct exposure to Russia, although we could still lose about $1 billion over time,” Dimon said in the letter. “But we are actively monitoring the impact of ongoing sanctions and Russia’s response, and are also concerned about their secondary and collateral impact on so many companies and countries.”
DImon said the bank’s economists expect the European Union, which is “highly dependent on Russia for oil and gas,” will experience slowing economic growth due to the aftermath of the war. They also expect the US economy to experience a negative impact as GDP is expected to grow by 2.5% in 2022, rather than the 3% previously expected by economists.
JPMorgan management warned that economic problems could worsen as Western nations tighten sanctions in response to escalating Russian military aggression.
“Many more sanctions could be added – which could dramatically and unpredictably increase their impact. This, combined with the unpredictability of the war itself and the uncertainty surrounding global commodity supply chains, makes for a potentially explosive situation,” added Dimon.
JPMorgan Chase was one of countless financial institutions and corporations that severed or cut their ties with Russia in response to the Ukraine war. Sanctions against Russia, such as banning Russian banks from the international SWIFT payment system, have effectively cut off the Kremlin’s access to the broader global economy and put Russia at risk of default.
Dimon said JPMorgan’s efforts to comply with the sanctions have been a “huge undertaking” for the bank — including efforts to ease sanctions on individuals and halt “billions of dollars in payments” based on government guidelines.
Dimon outlined what he called an “extraordinary need for strong American leadership” to counter geopolitical and economic uncertainty.
“Power abhors a vacuum, and it should be becoming increasingly clear to all that without strong American leadership, chaos is likely to ensue,” he said.
The billionaire banker noted that the triple impact of the war between Russia and Ukraine, the ongoing recovery from the COVID-19 pandemic and likely aggressive action by the Federal Reserve to combat rampant inflation have had an impact that is “unprecedented” for the global economy could be.
The Fed hiked interest rates in March for the first time in three years to stem inflation, which hit a four-decade high at 7.9%.
“I don’t envy the Fed what it needs to do next: the stronger the recovery, the higher the interest rates that follow (I think this could be significantly higher than markets are expecting) and the more quantitative tightening (QT ).” Dimon said.
https://nypost.com/2022/04/04/jamie-dimon-jpmorgan-could-lose-1b-over-russia-ukraine-war/ JPMorgan could lose $1 billion because of the war between Russia and Ukraine