A new report via Bloomberg details how JPMorgan Chase & Co. is preparing for the next economic downturn by weighing the option to relocate its Manhattan headquarters to lower-cost financial hubs such as ones in Plano, Texas; Columbus, Ohio; and Wilmington, Delaware.
JPM spokesman Joe Evangelisti told Bloomberg the bank's new headquarters (likely to be in Texas), will house twice the number of employees than its Manhattan office.
Sources told Bloomberg that hundreds of credit-risk employees have already transferred to Texas. Other sources have said Manhattan will no longer be the location for the bank's compliance.
Bloomberg noted that other large financial institutions had been exiting NYC for lower-cost commercial hubs across the country.
Deutsche Bank expanded operations in Jacksonville, Florida; Goldman Sachs has built officers in Salt Lake City; and AllianceBernstein Holding LP announced plans to move its headquarters to Nashville, Tennessee.
While JPM CEO Jamie Dimon told investors the bank would build a new headquarters at 270 Park Ave, in Midtown Manhattan, it has also quietly constructed a new building that can house 4,000 employees in the Dallas suburb of Plano. Already, JPM has 25,000 employees in Texas, and if the next recession strikes, it seems that the bank has a clear choice to move operations to a low-cost hub to weather the financial storm.
Dimon mentioned in an investor call last year that the Plano site could be the company's next headquarters.
"There are more JPMorgan Chase employees in Texas than any other state outside of New York," he said. "I'm sure it will be No. 1 soon."
Evangelisti said, "Location strategy is not simply about costs...We build in places to be close to local talent such as Palo Alto, to better serve clients and for business resiliency reasons."
JPM's location strategy is a response to streamline the bank before the next economic downturn.
The cost to run a company in NYC has skyrocketed in the last decade. Also, regulations and taxes in the city are some of the highest in the country.
In total, the bank has 37,000 employees across NYC, at least half are bank branch workers, a source told Bloomberg. Once construction at 270 Park Ave is completed, expected in 2023, JPM could consolidate employees across the entire metro area.
As for the next big trend in business, Wall Street banks are already making their exit plans out of NYC to lower-cost financial hubs across the country.