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J.P Morgan Joins OnDeck Capital Inc.


Jennifer Piepszak, the bank’s chief executive for business banking stated in an interview that J.P Morgan Chase & Co. is joining with OnDeck Capital Inc. on a new type of small-dollar loan product intended for the bank’s small-business customers. For businesses, small-dollar loans generally refer to those that are less than $250,000.

She added that the new product will be accessible over the internet to some J.P. Morgan Chase clients beginning in 2016. OnDeck’s shares increased 28% in aftermarket trading following news of the partnership.

The loans will be advertised under the brand of J. P. Morgan Chase but much information about the procedure still needs to be worked out and resides on the bank’s balance sheet, according to the report. It  would make OnDeck more of a technology seller for the bank than a lending partner.

According to Frank Rotman, a founding partner of venture-capital firm QED Investors, at least 100 field small-business lenders have started in the U.S in recent years.

In 2014, online lenders extended  $4.6 billion in small-business loans in the U.S., a figure that is estimated to increase to $47 billion in the year 2020, according to expert at Morgan Stanley.

In different cases, they are joining a market where many banks have moved back. Ten of the biggest banks proposing small loans to businesses extended $44.7 billion in credit in 2014, below 38% of their 2006 volume.

Online small-business lenders have sometimes been condemned for the interest rates they charge. An August report from the Federal Reserve Bank of Cleveland found that while the online-lending industry “holds promise for expanding access to credit, it also raises potential risks for small-business borrowers as these products can be considerably more expensive than traditional credit.”

By the end of September, the annual percentage rate on OnDeck’s outstanding small-business term loans ranged from 8.9% to 98.4%

This partnership with OnDeck follows J.P.Morgan’s increasing attention on building up its small business unit.

Jennifer Piepszak was named chief executive of Chase Business Banking in January, acquiring her role with the deal that the unit had a big chance to cross-sell small-business banking, credit-card and payment- processing services that could lead to hundreds of millions of dollars in additional income.

The bank’s operating committee, headed by Chairman and Chief Executive  James Dimon, requested for a corporate strategy report outlining those opportunities following its annual off-site withdrawal last summer.

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On Tuesday morning, Mr. Dimon stated at a Treasury Department conference that the bank’s small business unit was partnering with a peer-to-peer type of lender. He stated on a panel about financial inclusion that some new technology will be good for the market and nontraditional data will help determine if someone has good credit.

Its shares have dropped to 52 percent since the beginning of the year, but increased 28% in aftermarket trading succeeding the news of the partnership. Shares in J.P. Morgan is up 8% since the start of the year.

OnDeck, one of the biggest online lenders, which will focus on small businesses went public last December.

JPMorgan Shows Strength as It Pushes to Maintain Bonus Plans

JPMorgan Chase & Co is going to leave its bonus plan unchanged, setting the pressure on its competitors which are struggling in a high cost environment.The leading investment bank has decided to leave its bonus pool unmoved from the level in 2014, according to the current reports. This progress, which happened at a time when the company’s peers in the sector are striving to maintain costs, just goes to prove that JPMorgan has beaten its competitors through its operational productivity.

Earlier in November, the decision was released to top managers, but is not yet confirmed, according to the report.  In any case, whether the plan will come to reality or not, the move to leave the bonus plan untouched has produced a bullish movement for the company’s stock.  The majority of other banks is expected to lessen their employee bonus plans as they struggle with increased costs.

Banks find it hard to acquire high profits with the near zero interest rate policy. Therefore, in order to remain stable, some banks have no better choice but to lessen their costs. Some of the efforts that institutions have employed include reducing their employee rewards and cutting back some unwanted assets.

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