Citigroup Inc (C), JPMorgan Chase & Co. (JPM), And Why Shareholder Activism Is Good for Banks

Last year, JPMorgan Chase suffered losses of up to $7 billion at its Chief Investment Office due to an outsized trade. However, JPMorgan Chase & Co. (NYSE:JPM) reported earnings beat for the first quarter of the current year, while its mortgage originations also improved 37% over the prior quarter. This shows that JPMorgan Chase & Co. (NYSE:JPM)’s CEO can lead the bank to growth.

I believe corporate governance practices at most of the U.S. money center banks are not very encouraging. Only Brian Moynihan at Bank of America Corp (NYSE:BAC) has to answer to the chairman of his bank’s board. The rest of the CEOs are known to have dual power.

During the most recent quarter, Bank of America Corp (NYSE:BAC) produced some impressive results. Revenue of $23.7 billion was $200 million ahead of estimates, while the bank curtailed operating expenses due to its Project New Bank of America Corp (NYSE:BAC). However, the results were negatively impacted by settlement and litigation expenses, which have stalked the bank for quite some time now.

Conclusion

I believe shareholder activism and good corporate governance practices can lead the banks and their managements to work in the interest of the shareholders. At the moment, only Citigroup and Bank of America have split the CEO and chairman of the board’s positions into two different persons. However, among the two, Citigroup has really been able to benefit from this split and exhibited considerable improvement.

The article Shareholder Activism Is Good for Banks originally appeared on Fool.com is written by Adnan Khan.

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