Filed under: Deals, Industry, JPMorgan Chase (JPM), Bear Stearns Cos (BSC)
JP Morgan (NYSE:JPM) might be raising cash it does not need to prepare its balance sheet for more losses. The bank reported a $2.37 billion profit. That was down by half from a year ago, but was still an impressive number. The firm did set aside $4.4 billion for loan losses and took about $2.6 billion of write-downs tied to mortgages.
According to Reuters JPM “results calmed investors, who had hoped the bank would deal with the credit crisis superior than some others.”
So, why raise the capital? The answer might be in news that Wilbur Ross, billionaire specialist in Chapter 11 investing, is putting together cash from sovereign funds to invest in weak US financial stocks. According to Bloomberg “Ross will talk with Gulf investors in Abu Dhabi next week about 100 to 200 so-called thrift banks.”
Now that JP Morgan has acquired Bear Stearns (NYSE:BSC), it is nearly a sure bet that JPM CEO James Dimon will go looking for other bargains. He learned the practice under former boss Sandy Weill and his company is the product of a big merger with Bank One.
JP Morgan’s likely desire to purchase smaller financial firms may be a sign that stocks in banks and brokerages are bottoming. Dimon wants a piece of that. Why should Ross have all the fun?
Douglas A. McIntyre is an editor at 247wallst.com.
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