Tuesday, October 29, 2019

Bankers Fleeing New York

I suspect that this is mostly of interest to the few remaining holdouts. That is to the few New Yorkers who have not yet moved away from Comrade de Blasio’s failing city.

At the least, it’s an important sign of the times. New York City had been a financial hub. Roughly as Hong Kong was for China and East Asia. Wall Street had kept the city afloat, had flooded the city with money, supporting the legal profession, shops, restaurants, private schools, what have you. Today, as the city is losing its banking business, it is trying to attract more and more high tech firms, though the Queens Amazon debacle was certainly not a good sign.

So, what happens to New York City when financial service moves out of town? We have already noticed the billionaire Carl Icahn’s move out of New York to Miami will deplete the city’s tax revenue. Since 1% of the people pay 40% of New York’s taxes, when financial services move out the city will surely suffer.

The same issue dogs the protests in Hong Kong. Among the issues in that city is whether China needs Hong Kong more than Hong Kong needs China. After all, the city is a financial hub. But, what would happen if Chinese leaders decide to shift business to Shanghai or Shenzhen. It’s well and good to protest for freedom, but what if the money starts leaving town?

So, JPMorgan Chase, one of the world’s biggest banks is moving more and more people out of New York. The story suggests that the bank is preparing for the next economic downturn, but surely, the fact that quality of life and cost of living are better in other parts of the country has also been a determining factor. Perhaps the principle determining factor.

Zero Hedge reports:

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.

Think about it, the company headquarters in Plano, Texas will be bigger than the headquarters in New York.

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

JPMorgan Chase is not alone. Its actions are part of an exodus:

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.

Keeping employees happy means allowing them a good quality of life. High taxes and astronomically high rents and real estate prices have made it nearly impossible for any but the wealthiest to live comfortably in New York. And the city keeps imposing regulations that make it more difficult to do business:

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.

Most of those who are remaining are working at the network of branches that dot the city. One suspects that, what with the advent of online banking, those people will soon find their jobs taken over by AI.


Sam L. said...

NYC has tried a fast-draw, and shot itself in the foot. The ricochet hit the golden hog.

UbuMaccabee said...

New York should implement a mandatory carbon reduction mandate for energy production to be applied in 20% increments over the next ten years. It’s an existential necessity. That will create millions in revenues for all the tech jobs it will create, and make up for the loss of revenue from the banking sector. And it will provide the rest of the country a model for how green energy actually works when applied to a cold climate in the middle of winter. New York should create its own new green deal and show the world how it can be done.

Anonymous said...

Captain Insano finally meets his match, Ubu-RoiMaccabee.

Anonymous said...

Plano is a fairly nice place. Cost of living is probably only one-third of New York. Not a bad deal for those who would make the move. It does get hot in the summer though.