J.P. Morgan Chase & Co. is reviewing its relationships with several hundred U.S. clients that use the bank for back-office functions such as processing trades, said people close to the situation.
The bank has been examining its relationships with so-called domestic correspondent banks, for which it clears payments and processes other transactions, the people said. The industrywide review started in January and comes as J.P. Morgan tries to shore up controls in a period of heightened regulatory scrutiny and record fines.
As part of the review, J.P. Morgan stopped soliciting new business from its few hundred domestic-correspondent-banking clients. The bank, the largest in the U.S. by assets, also stopped accepting new clients while the review of internal controls and clients continues, the people added.
Ultimately, the bank may decide to cull a small number of clients as a result of the review, one of the people said.
One of the companies J.P. Morgan is reviewing: a Citigroup Inc. unit, Banamex USA, that is facing a Justice Department inquiry, according to one of the people familiar with the situation. Banamex isn’t being singled out and is among many firms being reviewed, one of these people said.