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Some of JPMorgan's Costs Aren't Going Away: Dimon

NEW YORK ( TheStreet) -- JPMorgan's (JPM - Get Report) $7.2 billion legal hit in the third quarter may be dismissed by some analysts as "non-core" to its business, but the truth is the legal challenges are changing the bank in a very fundamental and permanent way.

In a slide on page 15 of its investor presentation , the bank outlines steps being taken to simplify its businesses and tighten its controls in response to the new regulatory and legally charged environment.

The company plans to exit a number of businesses it considers relatively unimportant to its customers or those that have outsized operational risk.

This includes student lending, physical commodities, identity theft protection and credit insurance, co-branded business debit cards and gift cards and Canadian money orders, to name a few. Some of these exits have been previously disclosed.

The bank also said was lowering its resk by by discontinuing relationships with certain clients including lending to check cashing businesses, clearing services for 500 foreign banks, checking accounts for certain foreign domiciled clients and so forth.

The bank is cutting these business lines to minimize risks related to money laundering and other legal and reputational risks.

Shedding those businesses may mean losing a "couple hundred million dollars" in revenue, according to JPMorgan Chase CEO James Dimon.

"I think it's a core business principle to always simplify your business and to focus on where you can really win," Dimon told analysts during the bank's earnings conference call on Friday.

At the same time, the bank is making a sizeable investment in boosting its internal controls. "We want to be best in class. We want to get Six Sigma. Its become a number one priority," Dimon said.

The bank is spending a billion dollars on stepping up controls and is dedicating more than 5,000 employees to the effort.

Some of that investment is "permanent" Dimon said. So while legal costs should trend down over time, many changes to the business could be here to stay.

Dimon also acknowledged that new capital and liquidity requirements will affect client pricing.

The steps towards simplifying and de-risking the business "could take years," he said.

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