JPMorgan Chase is planning to develop a digital bank in Germany that it expects to serve as its hub for consumer services in the European Union, according to sources who confirmed the plans to Bloomberg. Chase, which is the largest bank in the U.S., is apparently hiring personnel in Berlin as it prepares to unveil its services in Germany sometime in 2024 or 2025.
The new digital bank will follow on the heels of JPMorgan Chase’s 2021 launch of a similar digital service in the U.K. Bloomberg’s sources suggested that the bank’s longer-term plans include an expansion of its digital banking footprint in other countries throughout the EU.
If true, JPMorgan’s planned expansion in Europe come at a time when other major U.S. banks seem to be hedging their bets in many foreign markets. Most banks that have continued to focus on growing their European markets have been focused on servicing the commercial markets and other wealthier target groups.
It is worth noting, however, that JPMorgan Chase is unable to acquire any additional deposit-based institutions within the U.S., since its current deposit holdings are in excess of the regulatory cap. A 1994 decision from Congress bars banks from purchasing other banks if the acquisition would result in the combined entity holding more than ten percent of the nation’s deposits.
Still, Chase CEO Jamie Dimon had vowed back in 2020 to be more “aggressive” in seeking acquisitions for the company, and subsequently guided the bank into a number of different digital-based purchases. To date, those investments have not yielded much success. That holds true for the bank’s UK-based digital offerings as well, as JPMorgan has acknowledged that its UK venture has resulted in hundreds of millions of dollars in losses—so far.
Nevertheless, the company reportedly expects that those digital endeavors will provide “significant income” each year once the services reach their breakeven point sometime in the next five years. And while the bank’s international growth initiatives chief executive Sanoke Viswanathan acknowledged that financial firms typically struggle to find success outside of their home countries, the introduction of digital capabilities is changing that dynamic.
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