JP Morgan Ireland profit falls ahead of downgrade to branch status

JP Morgan’s Irish banking unit saw its net profit fall by more than a third last year, as the Wall Street giant advanced plans to downgrade the legal status of the Dublin business to that of a branch of its German operation as it continues to simplify its European presence post-Brexit.

The move will not affect the bank’s ongoing expansion in the Republic, according to the company. Employee numbers in Dublin have grown 45 per cent in less than three years to 800.

The decline in JP Morgan Bank (Ireland)'s profits to $9.92 million (€8.58 million) from $16.5 million for 2019 was mainly the result of a drop in interest from loans to companies elsewhere in the group. The company, which is mainly focused on back-office support services for international funds, saw a rise in fees as its average assets under custody rose to $430.9 billion from $344.6 billion a year earlier.

JP Morgan Bank (Ireland) provides fund accounting, shareholder services, trustee services and global custody services to international clients, having transferred its treasury and cash management operation in 2018 to a Dublin branch of the group’s Luxembourg banking subsidiary.

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Reports first emerged a year ago that JP Morgan was planning to fold its Irish and Luxembourg banking subsidiaries into its German operation to reduce its number of banking units in the European Union to one, based in Frankfurt. The group pressed ahead in June with filings in each of the jurisdictions to get the ball rolling on the three-way merger.

The combination, expected to be completed next year, will see JP Morgan Bank (Ireland) transform from being a fully-fledged, Irish-regulated subsidiary of the US group to that of an authorised branch of the German outfit, JP Morgan AG, which will be renamed JP Morgan SE.

JP Morgan Bank (Ireland), led by the group's senior country officer in the Republic, Carin Bryans, said in its latest annual financial statement that the merger is not expected to lead to significant operational changes locally.

“This European bank will create a sustainable legal entity platform in the EU that will be more scalable and less complex than the current multi-entity structure and facilitate the provision of the group’s global capabilities to [European Economic Area] clients, and provide access to EU liquidity and products for globally operating clients,” it said.

JP Morgan traces its roots in Ireland back to 1919, when the National Land Bank was established under the direction of the first Dáil to provide credit to tenant farmers to buy their own land.

That bank came under the control of Bank of Ireland in 1926, was subsequently renamed National City Bank, and entered into a joint venture with Chase Manhattan Bank in 1968. Chase took full ownership of the Irish legal entity in 1979, acquired Chemical Bank Ireland in 1993, and merged, itself, with JP Morgan in 2000.