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JPMorgan Chase & Co (NYSE: JPM) said on Thursday it will buy Nutmeg to expand its footprint in the UK retail banking and investment sector. The British online investment management platform currently boasts $4.9 billion (£3.5 billion) in assets under management.

JPMorgan shares are currently about 3.5% down on the intraday chart. Trading at $151 per share at the moment, the stock is still up more than 20% on a year-to-date basis.  

The deal is yet to secure regulatory approval

JPMorgan wants to establish an online retail bank in the United Kingdom later this year. With over 140,000 clients, Nutmeg will help the US investment bank realise this plan. In November 2020, Nutmeg had partnered with JPMorgan Chase to launch an exclusive range of ETFs for its customers.

The announcement on Thursday did not disclose the valuation of the deal that is yet to secure regulatory approval. Commenting on the news, JPMorgan’s CEO of International Consumer, Sanoke Viswanathan, said on Thursday:

“We are building Chase in the UK from scratch using the very latest technology and putting the customers’ experience at the heart of our offering principles that Nutmeg shares with us. We look forward to positioning their award-winning products alongside our own and continuing to support their innovative work in retail wealth management.”

Last year, JPMorgan’s chief executive Jamie Dimon had expressed plans of increasing focus on acquisitions to add capabilities. The Nutmeg acquisition may be motivated from peer Morgan Stanley that recently brought Eaton Vance and E-Trade under its umbrella for $20 billion.  

US and the UK have different regulatory requirements

According to Innovate Finance, the fintech market of the United Kingdom is one of the world’s largest. Last year, it attracted venture capital funding worth $4.1 billion. JPMorgan refrained from employing the US-developed investment technology and acquired a company with ten years of operational experience in the UK because the region has different regulatory requirements.

JPMorgan picked Freshfields Bruckhaus Deringer as its legal counsel for the transaction and JPMorgan Securities as financial advisor. Nutmeg, on the other hand, named Taylor Wessing as legal counsel and Arma Partners as financial advisor.

The news comes months after JPMorgan Chase increased standards for new mortgage borrowers to minimize lending risk. At the time of writing, the largest US bank by assets is valued at close to $459 billion and has a price to earnings ratio of 12.03.

The post Here’s why JPMorgan acquired the UK’s largest robo-advisor firm appeared first on Invezz.



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