(Reuters) – JPMorgan Chase & Co (JPM.N) will stop making student loans in October, according to a document reviewed by Reuters on Thursday, after the biggest U.S. bank concluded that competition from federal government programs limits its ability to expand the business.
The company will stop accepting applications for private student loans on October 12, at the end of the peak borrowing season for this school year, according to a memo from the company to colleges.
The move means less competition for remaining players in the market, such as Wells Fargo & Co (WFC.N) and Discover Financial Services (DFS.N).
“We just don’t see this as a market that we can significantly grow,” said Thasunda Duckett, chief executive for auto and student loans at Chase, in an interview on Thursday.
Not making more loans “puts us in a position to redeploy those resources, as well as focus on our No. 1 priority, which is getting the regulatory control environment strengthened,” she said.
JPMorgan was ordered by federal regulators in January to strengthen its risk controls and its compliance with anti-money laundering standards after the company came under intense scrutiny following its $6.2 billion “London Whale” derivatives loss. CEO Jamie Dimon vowed in April to make the company’s controls his number one priority and said the bank would scale back some of its growth initiatives to do that.
The decision follows the bank’s move last year to make education loans available only to existing Chase bank customers. The retail bank has some 64 million customers and 5,657 branches. Last year, Chase made education loans to 12,500 people for a total of about $200 million.
Reuters has the full article
