JP MORGAN in France Best in France Case Study May 2004, Monday 17 th Marc GAUTIER, James JOHNSTON, Denis LANTRADE, Mazen SINGER and Natsuki TOKUBUCHI

Best in France – HEC MBA 2005 Executive Overview A global financial services firm present in more than 50 countries A global financial services firm present in more than 50 countries Investment banking Investment banking Commercial banking Commercial banking Securities Securities Treasury Treasury Equities Equities

Best in France – HEC MBA 2005 Executive Overview American global culture adapted to the French environment Key constraints : labor law, income tax and corporate tax Key benefits : quality of life, infrastructure and size of the economy Competitiveness with UK market

Best in France – HEC MBA 2005 JP Morgan Present in Paris since 1868 Present in Paris since 1868 Leading player : 801 $ Bn assets Leading player : 801 $ Bn assets # 1 Global Syndicated Loans, 18%MS # 1 Global Syndicated Loans, 18%MS # 1 in Emerging Markets International Bonds, 16%MS # 1 in Emerging Markets International Bonds, 16%MS # 4 in Global Equity and equity-related capital raising # 4 in Global Equity and equity-related capital raising #1 Global convertibles 13%MS #1 Global convertibles 13%MS

Best in France – HEC MBA 2005 Company’s results # 1 private bank US and # 3 worldwide # 1 private bank US and # 3 worldwide # 2 EU mutual fund provider # 2 EU mutual fund provider # 3 assets under custody 7.6 $ trillion # 3 assets under custody 7.6 $ trillion # 4 mortgage originator and service in the US, 4 million+ customers (Chase) # 4 mortgage originator and service in the US, 4 million+ customers (Chase) # 4 US credit card issuer (Chase) # 4 US credit card issuer (Chase) # 1 US bank originator of automobile loans (Chase) # 1 US bank originator of automobile loans (Chase)

Best in France – HEC MBA 2005 French subsidiary's clients Company's clients are mainly businessmen with wealth over 20 $M Company's clients are mainly businessmen with wealth over 20 $M Need to be present in France to serve these clients Need to be present in France to serve these clients Also responsible for Belgium and some clients from Switzerland or in London Also responsible for Belgium and some clients from Switzerland or in London

Best in France – HEC MBA 2005 Why it came to France In 1868, France was already among the biggest economies In 1868, France was already among the biggest economies Current size of the French economy Current size of the French economy French regulations French regulations

Best in France – HEC MBA 2005 Company values American company with a global corporate culture American company with a global corporate culture Almost all the executives in Paris are French Almost all the executives in Paris are French Work in English Work in English French rules French rules

Best in France – HEC MBA 2005 Constraints in France At the origin, nothing special At the origin, nothing special Today : labor law / lack of flexibility Today : labor law / lack of flexibility High income taxation High income taxation Corporate taxation Corporate taxation Hinders the rapid expansion of foreign investments. Hinders the rapid expansion of foreign investments.

Best in France – HEC MBA 2005 Adaptation to France For investment bankers, recruitment process and decisions in London. For investment bankers, recruitment process and decisions in London. Own recruitment policy in the private bank Own recruitment policy in the private bank French market requirements and specificities French market requirements and specificities

Best in France – HEC MBA 2005 Key Benefit Numbers One of the biggest economies (G7) One of the biggest economies (G7) Excellent infrastructure Excellent infrastructure Telecom network Telecom network High quality of life High quality of life Future : fiscal amnesty ? Future : fiscal amnesty ?

Best in France – HEC MBA 2005 Essential Advice French regulations are part of the “game”: before they change, you have to respect them Special care for the laws that govern the financial services Current laws do not allow Paris to compete with London

Best in France – HEC MBA 2005 Possible improvements Adaptation of labor laws to improve the flexibility Adaptation of labor laws to improve the flexibility Special status for foreign executives Special status for foreign executives Fiscal amnesty Fiscal amnesty And … reform the I.S.F. tax And … reform the I.S.F. tax

Best in France – HEC MBA 2005 Any question