JPMorgan to invest up to $10 billion in US national security

Source Credit : CNBC

JPMorgan Chase announced plans on Monday to hire bankers and invest up to $10 billion in U.S. companies critical to national security and economic resilience as part of a broader $1.5 trillion pledge.

The 10-year initiative aims to facilitate, finance and invest in industries central to the growth of the U.S. economy, including defense, energy and manufacturing.

Shares JPMorgan Chase climbed more than 2% after the announced by the bank

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JPMorgan said it will deploy the $10 billion through direct equity and venture capital investments.

CEO DIMON: INITIATIVE NOT TRUMP-DRIVEN, '100% COMMERCIAL'

U.S. President Donald Trump is looking to modernize infrastructure and reduce dependence on foreign supply chains, particularly in sectors such as pharmaceuticals, semiconductors, clean energy and rare earth minerals.

Trump has criticized JPMorgan and its rivals for "debanking" clients - cutting ties with certain customers by closing their accounts or refusing to do business with them - for their political or religious beliefs.

JPMorgan CEO Jamie Dimon said the investments were not driven by the Trump administration.

"This is a JPMorgan initiative," Dimon told journalists on a call in which he was asked several times about the government's involvement. He emphasized that the investments would be "100% commercial" and not philanthropic.

Trump revived a trade war with Beijing on Friday, ending an uneasy truce between the world's two largest economies with promises to sharply hike tariffsafter China expanded its rare earths export controls. However, he later struck a more conciliatory tone, saying he hoped the dispute would be "short-lived" and that he remained open to negotiating with Chinese leaders.

"It has become painfully clear that the United States has allowed itself to become too reliant on unreliable sources of critical minerals, products and manufacturing – all of which are essential for our national security," Dimon said in an earlier statement.

JPMorgan said its new "security and resiliency initiative" would facilitate financing and investment across four strategic sectors: supply chain and manufacturing; defense and aerospace; energy independence; and frontier technologies such as artificial intelligence and quantum computing.

The firm said it had already planned to facilitate and finance about $1 trillion over the next decade to support clients in these industries, according to previously undisclosed internal figures, but it would increase the size by 50%.

"JPMorgan's move should promote goodwill with both the administration as well as the business sector," Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors, wrote in a note.

"The other major U.S. banks already funnel oceans of credit into defense, energy and advanced manufacturing, but JPMorgan stitched the activity into one big patriotic umbrella with an advisory council and a headline number that grabs cameras."

Some analysts disagreed.

"This initiative is different and unique in terms of the magnitude and the time commitment relative to what I have seen from other banks. This is a newer direction for sustainability initiatives," Wells Fargo bank analyst Mike Mayo said.