CASE STUDY

Jamie Dimon and Bank One (A)

Jamie Dimon and Bank One (A)

What is Dimon trying to accomplish in addition to learning about the situation at Bank One?

On January 3, 2003, Jamie Dimon (Dimon), the then Chairman and Chief Executive Officer (CEO) of Chicago-based retail banking and credit card major Bank One Corporation (Bank One), was awarded the 2002 CEO of the year award4 by Morningstar Inc. (Morningstar). Dimon was recognized with this award for steering Bank One through turbulent times in the financial services industry. On Dimon being given the award, Patrick Dorsey (Dorsey), director, stock analysis, Morningstar, said, "The 2002 winner of Morningstar's CEO of the Year award proves that you don't need a grand strategy to run a great business - you just need to get the basics right (http://goliath.ecnext.com). Jamie Dimon has transformed what once was considered one of the most poorly run banks in the country into a solidly profitable firm with a bright future" (Markus, 1977, 63-78).

Dimon had become well known in the financial services scenario during the late 1980s, for turning around Baltimore-based consumer lending company, Commercial Credit Corp. (Commercial Credit) with Sandy Weill (Weill), a successful entrepreneur in the financial services industry. In view of his impressive record of turning around beleaguered companies, he was appointed as Chairman and CEO of Bank One in March 2000 to resurrect the ailing bank.

When Dimon landed at Bank One, he noted that the bank had serious problems. He observed that it had a string of mergers that were not integrated with its existing lines of business (Markus, 1977, 63-78).

There was uncontrolled overhead spending coupled with weak loan quality and low employee morale. Moreover, a major chunk of the bank's problems came from First USA Inc. (First USA), the credit card division of the bank that was characterized by poor customer service and high rates of interest. Dimon also discovered that the accounting and information technology (IT) systems had become outdated and required enhancement to improve accountability, manage profitability, and upgrade the service levels at the bank. Havinz identified the problems; Dimon chalked out a plan to turnaround the company in 2000. His plan included a straightforward strategy of slashing costs, tightening the standards of lending, and cutting down the number of bank branches (http://goliath.ecnext.com).

What signals is Dimon sending to the organization?

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 (http://goliath.ecnext.com). 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." In addition to gaining insights into the securities industry, Dimon got the opportunity to meet Weill. After completing his graduation from Tufts, in 1978, he worked in management consulting ...