(MENAFN - AFP) JPMorgan Chase Tuesday unveiled plans to cut costs and reduce costly deposits from institutions as it seeks to lift profits in an ever-tougher regulatory environment.
The biggest US bank by assets, JPMorgan projected $2.8 billion in expense reductions in its corporate and investment bank division through 2017 and another $2.0 billion in expense cuts in its consumer and community banking segment.
The move comes as big banks continue to face major challenges from regulators that have resulted in large legal settlements and raised the cost of riskier business lines.
JPMorgan said the rise of digital banking permits it to cut its physical footprint, enabling fewer retail locations and smaller staffs at those that remain.
The bank will cut its branch count by about 300 through the end of 2016, according to slides it presented at an investor day.
JPMorgan's corporate and investment banking segment plans $2.8 billion in savings through 2017, with the bulk, $1.5 billion, coming from business streamlining.
The bank expects to reduce the amount of non-operating deposits by up to $100 billion by the end of this year. The change will target excess cash held by financial institutions, such as hedge funds and foreign banks. It will not affect individual account-holders.
Under new regulations targeting riskier holdings at JPMorgan and other banks deemed "systemically important" by regulators, JPMorgan is required to hold "much more capital" against these deposits than other moneys, JPMorgan executives said in an internal memo.
These regulatory requirements, imposed in the wake of the 2008 financial crisis, mean that keeping such non-operating cash from institutions represents "a costly and inefficient use of our balance sheet," said the memo.
"We will work with clients to encourage off-balance sheet alternatives... and we will likely charge for some deposits, or in some cases, ask clients to hold their non-operating deposits at a different firm," the memo added.
JPMorgan executives offered a robust defense of the bank's business model, rebutting critics on Capitol Hill and from within the financial community who have called for a break-up of the bank.
A presentation by chief financial officer Marianne Lake said bank clients benefit from a rich referral network, depth of product offerings and global presence made possible by offering major divisions such as investment banking, consumer banking and business banking.
"Our businesses generate significant benefits from each other," Lake said.
Dow component JPMorgan Chase rose 2.4 percent to $60.78 in midday trade.