JPMorgan plots Germany consumer bank in international foray

JPMorgan Chase is planning to launch a digital bank in Germany as its second international consumer outpost, a move that will create a launchpad for the biggest U.S. bank to further expand in Europe.

The launch is slated for late next year or early 2025, and the firm expects to target other European Union countries after that, according to people familiar with the plans. JPMorgan has been hiring in Berlin as part of the effort, and intends for the German capital to be its base for EU consumer operations, the people said, asking not to be identified as the plans aren’t public.

New York-based JPMorgan made its first consumer foray beyond U.S. borders in late 2021 with a digital-only retail bank in the U.K. offering checking accounts. The firm plans to introduce credit cards to that platform as soon as this year, followed by personal loans, the people said. A JPMorgan spokesperson declined to comment on its international consumer expansion plans.

Germany’s banking market is one of the most competitive in the world. The vast majority of the country’s hundreds of lenders are small and their unique ownership structure — many savings banks belong to municipalities — means they’re under less pressure to generate profits.

Foreign banks including Barclays and Goldman Sachs Group have bulked up in the country as they aim for a bigger slice of the business with German companies and wealthy individuals. Many non-German banks have stayed away from retail, where margins are low, with ING Groep being one of the successful exceptions. The Dutch bank now has more than 9 million customers in Germany.

Rivals retrench

JPMorgan has long eschewed the costly, branch-heavy approach that its rivals Citigroup and HSBC Holdings used as they expanded overseas in decades past. That restraint proved prescient as the rise of fintech apps in recent years changed the calculus for JPMorgan’s international consumer efforts.

Now, JPMorgan is one of the few big U.S. banks expanding its consumer presence internationally. Citigroup is in the process of selling off more than a dozen retail units around the world. Goldman Sachs has also said its pulling back in consumer banking, which included a U.K. offering.

Sanoke Viswanathan, JPMorgan’s chief strategy and growth officer who oversees its international consumer push, signaled the firm’s ambitions in an investor presentation in May. As of that month, Chase UK had more than 500,000 customers and deposit balances of about $10 billion, according to Viswanathan’s presentation. While the firm anticipated a $450 million pretax loss tied to the effort last year, it expects to break even in five to six years.

“Consumer banking outside the United States represents a significant untapped opportunity for the firm,” Viswanathan said at the time. “Historically, banks have struggled to do well in markets outside their home markets in retail banking, but we think this is changing with digital.”

Jamie Dimon, JPMorgan’s longtime chief executive officer, has been plowing money into acquisitions and investments in recent years to build out offerings and fend off competition. In a section on that topic in his annual letter to shareholders last year, he cited the firm’s consumer expansion abroad, touting advantages including a global payments business and an international private bank.

As part of that investment agenda, JPMorgan agreed to buy the U.K. digital wealth manager Nutmeg in 2021, which it is now integrating into its U.K. platform. That same month, it took a 40% stake in the Brazilian bank C6.

“We have a big product road map ahead of us, including lending products and investment products, and as we build this out, we wanted to complement and accelerate our strategy,” Viswanathan said in May, touting both investments.

— With assistance from Stephan Kahl.

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