CEO Jamie Dimon spends US$26.6m - a year's pay - to buy JPMorgan stock after bank rout

JPMorgan Chase CEO Jamie Dimon.
JPMorgan Chase CEO Jamie Dimon. PHOTO: AFP

NEW YORK (BLOOMBERG, REUTERS) - Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co, spent US$26.6 million to buy shares of his bank on Thursday (Feb 11) after they tumbled to the lowest price in more than two years.

Mr Dimon, 59, bought 500,000 shares, bringing his total holding to 6.75 million shares, according to a regulatory filing. He made the purchase because he believes the stock is cheap after a global rout in equities, according to a person with knowledge of his thinking.

Shares of JPMorgan, the largest US lender by assets, has fallen nearly 20 per cent this year, amid a global selloff in equities, led by financial stocks. The stock closed at US$53.07 on Thursday (Feb 11) in regular trading.

The outlook for bank profits has dimmed with expectations of continued low interest rates, higher costs for bad loans, particularly related to energy, and a slow economy.

JPMorgan said last month that its tangible book value, which is its net worth, was US$48.13 per share at the end of December.

Other global banks including Citigroup, Bank of America, Credit Suisse and Deutsche Bank have all plunged more than 32 per cent. JPMorgan climbed 2.9 per cent to US$54.62 at 6:18 pm in extended trading on news of Mr Dimon's purchase.

Executives can sometimes shore up confidence in their firms after purchasing shares in the open market. Citigroup CEO Michael Corbat and Chairman Michael O'Neill each bought about $1 million shares of their bank's shares on Jan 22 after they fell to the lowest in more than three years. The stock tumbled 15 per cent since.

A total of 699 officers and directors of US companies purchased their own stock in the past 30 days compared with 828 who sold, the most bullish ratio in more than four years, according to data compiled by the Washington Service and Bloomberg and reported on Wednesday.

Stocks with the worst losses, such as financial firms, are seeing the biggest increase in demand. Howell D McCullough III, chief financial officer of Huntington Bancshares Inc., snapped up 25,000 shares on Feb 1 after the Ohio lender tumbled 22 per cent.

Dimon's total compensation for 2015 was US$27 million, mostly in stock units linked to the bank's future performance. That represented a 35 per cent raise from a year earlier as profit reached a record US$24.4 billion.