Eileen Serra's Rise at JPM Highlights Changes in Cards, Bank Itself

There is something to be said for being in the right place at the right time.

Eileen Serra became the chief executive officer of JPMorgan Chase's (JPM) card services on Monday, benefiting from the broader executive shake-up at the company caused by its recent trading scandal and from changes in the cards business that play to her strengths.

"It's becoming clearer that in light of the outsized trading loss within the [Chief Investment Office], the board is taking a closer look at different and creative ways to further strengthen the risk management system of JPMorgan, together with developing the true talent pool of the organization," Todd Hagerman, an analyst at Sterne Agee, says.

"This includes rotating tenured senior executives overseeing various business units as well as recognizing proven talent in the organization, many of whom having served in leadership roles in other businesses," he says.

Serra, formerly the head of card consumer-branded products, replaces Gordon Smith, who is now co-CEO of Chase consumer and community banking. She will manage all card units and be a member of the consumer and community banking management team. Serra was unavailable for an interview Monday, a JPMorgan spokesman said.

A number of executives besides Serra and Smith have been shifted to new jobs since the exposure of multibillion-dollar trading losses in the chief investment office last quarter.

Before joining JPMorgan in 2006, Serra was an executive at Merrill Lynch and American Express (AXP) and a partner at McKinsey & Company. She has a bachelor's degree from the University of California and an MBA from the University of Chicago.

Serra's earlier management experience, particularly with affluent customers at JPMorgan and Merrill Lynch, should aid her in the new position, as banks focus their efforts on high-spending transactional customers who pay off balances every month, says Marty Mosby, an analyst at Guggenheim Securities.

"Credit card folks are moving from balance cardholders to more affluent transactional cardholders, so that's where you're seeing some of the emphasis," says Mosby, noting that widespread consumer deleveraging has brought down industry profits on those with high card balances.

"Chase is already starting that process … so giving Eileen the ability to make those decisions and begin to really develop that out — she was already in the process of doing that for the company anyway," Mosby says.

Executive swaps, like moving Smith from card services to consumer and community banking from card services, which opened up the spot for Serra, force bankers to think beyond their own divisions, Mosby adds.

JPMorgan is "constantly moving these executive managers from one to business to another so they can learn about the whole company," he says. "You lose the territorial processes that can happen within companies where you're focused about your group and don't think about company as a whole."