Interview: Chinese companies to become important players on global stage: JPMorgan's senior executive

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Interview: Chinese companies to become important players on global stage: JPMorgan's senior executive

(Xinhua) 08:29, October 31, 2013

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Without any doubts, Chinese companies "are going to become very important players on the global stage," Mike Cavanagh, co-chief executive officer of the Corporate and Investment Bank (CIB) of JPMorgan Chase & Co., has told Xinhua in a recent interview.

"We feel very good about the prospects, in particular about the economic growth in China and what it means for the growth of Chinese companies as they grow internationally over the many years to come," Cavanagh said.

"Sitting in an economy where we would be lucky to grow at 2 percent and 2.5 percent, we are quite envious of the ability to grow at around 7.5 percent. It's fabulous. I feel very confident that over the next 10, 20, 30 years, there is a very strong potential and likelihood that Chinese economy grows strongly and that's why we are very committed to investing in China," he said.

JPMorgan has played a key role in advising a number of major cross-border merger and acquisition (M&A) deals this year, including the 130-billion-U.S. dollar deal for Verizon Communications to buy out Britain's telecom company Vodafone's 45 percent stake in Verizon Wireless in September, Nokia's sale of its handset division to Microsoft for more than 7 billion U.S. dollars, as well as the 28-billion-U.S. dollar acquisition of H.J. Heinz by billionaire investor Warren Buffett's Berkshire-Hathaway and Brazil's 3G Capital in February.

"We are very hopeful that JPMorgan, with our global network, is going to be in the position to serve the needs of Chinese companies as they go all around the globe and also the needs of Chinese investors as they invest all around the world," Cavanagh said.

"Hopefully the Chinese companies will rely on us in the same way that European and American companies do," he added.

Cavanagh said: "It's important to point out that the relevance of JPMorgan is less about how often you see JPMorgan's logo in China itself -- as we are not a retail bank. What's most important is that when you see Chinese companies investing in Rio, or Milan, or Johannesburg and Cape Town, that's where JPMorgan is going to help them grow their international businesses."

"Obviously what's important to JPMorgan as a global financial institution is that we have the strength and presence in China itself to serve the multinational companies like Johnson & Johnson, Coca-Cola, Ford Motor Company, Mercedes Benz, Nike, Apple as they are going into China. And do the same to Chinese companies as they invest outside China," Cavanagh noted.

When asked what advice he will give to Chinese companies that plan to do M&A in the U.S. market, Cavanagh said "despite some of the political and economic challenges after the financial crisis, the U.S. is a big economy that presents growth opportunities. The U.S. culture is still built on ingenuity, energy and economic vitality."

The CIB business Cavanagh co-headed maintained its No. 1 ranking for Global Investment Banking fees during the third quarter of this year, according to JPMorgan's quarterly reports.

"Half of our revenues for CIB are non-U.S., which has been a focus of ours for many years. Our international business is strategically important," he said.

According to Cavanagh, JPMorgan has operations in more than 60 countries and offers solutions to clients in more than 100 countries.

In the third quarter, JPMorgan reported strong underlying performance across its businesses despite sizable litigation costs. Data showed JPMorgan continues to be the top fees earner globally in the third quarter. The bank ranks No. 1 in investment banking business in terms of market share. Its market share has increased from 7.5 percent to 9.0 percent during the first nine months of the year.

Following the "London Whale" trading debacle, Cavanagh pointed out that "we've tightened up risk and controls broadly. It's probably the top agenda for the management team across the company to redouble our efforts around the risk and control agenda."

Five years after the financial crisis, Cavanagh said the big changes in the U.S. banking sector are much higher levels of capital and conservative liquidity.

"The pure investment banks no longer exist. They are all part of Fed-regulated bank holding companies with requirements around liquidity and capital, which is very different," he said.

"At JPMorgan, we've always been proud of the strength of our balance sheet and the strength of our capital and liquidity. That was a major reason why we did so well throughout the financial crisis and got to play the important role in supporting the system during the very tough times," he noted.