Jamie Dimon and the Turnaround of Bank One
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Case Code: BSTR325 Case Length: 15 Pages Period: 2000-2003 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: Bank One Corporation Industry: Banking, Financial Services Countries: USA Themes: Leadership & Values, Turnaround strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Trouble Begins at Bank One
In 1999, Bank One began facing problems, most of which were attributed to its credit card division, First USA. According to Mayo, "Bank One has weakened significantly over the past several months, primarily because of bad news at First USA - and we think there could be more bad news to come. In our opinion, management credibility - at a low before the latest earnings guidance - has sunk even further, and we think credibility cannot be restored in the near term."...
Dimon Comes to Bank One
On March 27, 2000, Dimon was hired as the CEO of Bank One. According to John Hall, director, Bank One, "Jamie's fresh perspective and his ability to galvanize employees also set him apart from an exceptional field of candidates from around the country." However, a few analysts remained skeptical about Dimon being shortlisted as the finest candidate. "Mr. Dimon has limited commercial banking experience, still 27% of earnings and an area at Bank One with undifferentiated competitive positioning. He also has less experience with large credit card operations since Travelers had a small presence...
Turnaround of Bank One
After having evaluated the operations of Bank One and interaction with the employees, Dimon initiated a US$ 1.9 billion restructuring plan. With this restructuring initiative, Dimon aimed to sort out issues related to the unprofitable credit card division, phasing out unnecessary Internet investments, incompatibilities related to information systems, etc. He also sought to stem the losses faced by the company and fortify its balance sheet. Besides, Dimon planned to cut costs of around US$ 500 million in a bid to revive the company's stock...
The Results
Dimon's efforts in turning around Bank One were appreciated by many analysts. By the end of 2002, the company's stock value had increased by over 30 percent compared to when Dimon had joined the company. Analysts expected Bank One to earn US$ 3 billion revenues in 2001...
Looking Ahead
In 2003, Bank One's success story under the able leadership of Dimon continued. For the year-ended 2003, Bank One reported earnings of US$ 3.5 billion compared to US$ 511 million losses of 2000 (Refer to Exhibit II for the financial highlights of Bank One)...
Exhibits
Exhibit I: Background Note on Bank One
Exhibit II: Financial Highlights of Bank One
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