citi

In reversal, JPMorgan to cut 4,000 jobs

February 26, 2013: 12:28 PM ET

A year ago CEO Jamie Dimon was still talking growth for his mega-bank.

JPMorgan's CEO Jamie Dimon

JPMorgan's CEO Jamie Dimon

Update: 2/27/13, 10:30 AM.

FORTUNE -- An encounter with a whale can really change a fella.

A year ago, at JPMorgan's investor day, CEO Jamie Dimon said he believed his mega-bank was still too small. He said his firm would continue hiring and opening branches, even as the economy remained slow.

This year, it appears Dimon's tune has changed.

JPMorgan Chase (JPM) kicked off this year's annual investor day on Tuesday, with plans to reduce headcount and expenses in 2013. The bank says it expects to eliminate 4,000 positions and cut costs by $1 billion over the course of the year.

And the cuts will accelerate next year. Later in the day, Dimon said that the bank plans to eliminate as many as 13,000 additional employees in 2014. Most of the cuts will come from the bank's mortgage banking unit.

That's good and bad news. In part, the cuts in its mortgage unit signal that the bank believes the worst of its home loan problems are behind it.

But it also shows how, after a year dealing with a multi-billion dollar trading loss, credit rating downgrades, increased regulations and a slow market for deals, even Dimon appears to be paring back his vision. JPMorgan's headcount rose by 20,000 in 2011 to just over 260,000, as others were shrinking.

MORE: JPMorgan: Don't blame us for the weak recovery

Now, even Wall Street's best performing bank can't avoid the pressure to slim down. In the past year or so, as banking profits have sagged with low interest rates and, at least until recently, few deals, there has been a race among Wall Street CEOs to prove their bank can be the most efficient.

In December, Citigroup (C) announced it would lay off 11,000 employees. In doing so, the bank touted that its so-called efficiency ratio would be among the lowest of the big banks. Goldman Sachs (GS) is also reportedly planning a new round of layoffs. Last year, Goldman executives talked about their desire to be Wall Street's low cost provider. Not exactly Master of the Universe talk.

Even with the job cuts, JPMorgan will still be plenty big. The firm's head count fell modestly in 2012 to 258,000 employees. That's up from just over 180,000 five years ago.

Update: An earlier version of this story said that JPMorgan planned to cut 19,000 jobs from its community and mortgage banking units by the end of 2014, but had not made a comment about overall staffing levels for 2014. In fact, Dimon clarified that number later in the day.

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