Managing cash: Making sure your assets are well protected

Last year’s shocks to the global banking system pushed many to become more discerning when selecting a bank, and for good reason.

When considering financial institutions, the rate of interest you’ll earn on your money can be a driving motivation in where you deposit your assets, but it is only part of the equation. The product offerings, branch network and digital platform should suit your needs & lifestyle—but it is also wise to consider the quality of the firm’s advice and services, its commitment to cybersecurity and the strength of its balance sheet.

Here are a few questions to ask yourself when evaluating the long-term security of your assets and deciding where to entrust your wealth.

How much does your bank invest in cybersecurity?

As online banking, investing and payment systems become more embedded in our financial lives, cyber criminals are finding equally sophisticated ways to exploit the global banking system.

To protect client assets and information as well as their own operations, financial institutions should be investing heavily in computer systems that monitor money movement transactions for fraud, as well as in software, networks, storage devices and other technology assets.

These might include:

• Multi-factor authentication
• Rigorous privacy controls
• Real-time notifications when problems occur
• Training and educating staff and clients to guard against new threats

Can your bank weather adverse market conditions?

Basel III, an international regulatory accord, introduced a set of reforms to mitigate risk within the global banking sector in the wake of the Great Recession (2008). These tighter regulatory controls and capital requirements require banks to maintain certain leverage ratios.

While there is enormous complexity to these efforts, three closely watched indicators can help you monitor the fiscal health of your financial institution:

• Common Equity Tier 1 (CET1) Capital: This is the core capital that a bank holds in its capital structure. Regulators require banks to hold certain levels of Tier 1 and Tier 2 capital as reserves so that they are able to absorb losses without any repercussions. The minimum Tier 1 capital ratio is 6% of the bank’s risk-weighted assets

• Loan-to-Deposits Ratio: This figure compares a bank’s total loans outstanding against its total deposits. It is an important indicator of whether a bank has enough liquidity to handle unexpected losses. Generally, a higher ratio may imply greater risk exposure of a bank’s balance sheet

• Credit rating: Credit rating assesses the ability of countries and businesses, including financial institutions, around the world to meet their financial commitments. The most common rating agencies are Standard & Poor’s (S&P), Moody’s and Fitch, which evaluate credit ratings based on a letter scale. Each agency’s highest credit rating is either “AAA” or “Aaa,” demonstrating strong reliability and low risk. Ratings are updated on a quarterly basis and posted on each agency’s respective website

The safety and security of our clients’ assets are our top priorities. Your J.P. Morgan team can answer any questions you may have about how we protect your accounts. You can also learn more here.

What are the limits of government protection?

Once you size out the appropriate amount of cash needed for your liquidity needs, it’s important to keep in mind other protections beyond what your financial institution provides. Following market volatility, many people have questions about the extent of federal government protections for deposit accounts.

U.S. deposit accounts are protected by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per each depositor account if it is held at an insured bank. Keep in mind:

• You do not have to apply for FDIC protection. Coverage is automatically provided for each type of deposit account ownership category¹

• All of your deposits in the same ownership category in the same FDIC-insured bank are added together for the purpose of determining FDIC deposit insurance coverage. However, you may qualify for more than $250,000 in FDIC deposit insurance coverage if you deposit money in accounts that are in different ownership categories

• For example, if you have two single ownership accounts (such as a checking account and a savings account) and an individual retirement account (IRA) at the same FDIC-insured bank, then you will be insured up to $250,000 for the combined balance of the funds in the two single ownership accounts. You will be separately insured up to $250,000 for the funds in the IRA, because IRAs are in a different account ownership category

If your accounts hold more than the standard insured amount, it is the stability/capitalization of the institution where you bank that protects your deposits beyond the FDIC-insured amount.

We can help

For more information on our cyber and fraud protections, please contact your J.P. Morgan team to schedule a session with our cybersecurity or fraud prevention specialists on how to secure your technology and your financial accounts.

Additional information:

• Federal Deposit Insurance Corporation Resource
• Banking capabilities at J.P. Morgan

Our Financial Strength²

• Basel III CET1 Capital Ratio: 15%³
• Credit Rating: Moody’s Investors Service A1⁴ | Standard & Poor’s A-⁴ | Fitch Ratings AA-⁴

¹FDIC insurance is limited to these types of accounts: negotiable order of withdrawal (NOW) accounts, savings accounts, money market deposit accounts (MMDAs), time deposits such as certificates of deposit (CDs), cashier's checks, money orders, and other official items issued by a bank. Deposits not covered by the FDIC include securities, mutual funds and similar types of investments, Treasury securities (bills, notes and bonds), and safety deposit boxes or their contents.

²As of December 31, 2023, unless otherwise indicated.

³Represents estimated common equity Tier 1 (“CETl”) capital and ratio under the Basel lll Fully Phased-In capital rules to which the firm will be subject as of December 31, 2023. Common equity Tier 1 (“CETl”) capital, Tier 1 capital, Total capital, risk-weighted assets (“RWA”) and the CETl, Tier 1 capital and total capital ratios and the supplementary leverage ratio (“SLR”) under the Basel lll Fully Phased-In capital rules, to which the firm will be subject commencing December 31, 2023, are considered key regulatory capital measures. These measures are used by management, bank regulators, investors and analysts to assess and monitor the firm’s capital position. For additional information on these measures, see Capital Risk Management on pages 86-96 of the firm’s Annual Report on Form 10-K for the year ended December 31, 2023.

⁴Long-term issuer rating for JPMorgan Chase Bank, N.A.