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Do your existing loans support your current goals?

As markets or personal circumstances change, it is important periodically to review the impact on your investment portfolio. At J.P. Morgan Private Bank, we believe that it is equally useful to regularly review your borrowing strategy to ensure that your liabilities are appropriately structured going forward.

Specifically, it’s important to make sure the underlying basis of any credit solution you have aligns with your overall wealth management strategies. This includes assessing:

  • Are the duration and payment frequency still relevant?
  • Have your investment objectives changed?
  • Are you appropriately positioned for the current interest rate environment?

“The same way that we believe in active management for your assets, we think you should bring that same discipline to the right side of your balance sheet with your liabilities,” said Scott Milleisen, U.S. Head of Capital Advisory at J.P. Morgan Private Bank.

“It’s uncertain how rates may move in 2017, and so I’m encouraging clients to think proactively about having access to liquidity. But also using what the environment gives us—and take this opportunity to potentially restructure your liabilities.”


A business owner in the exploration and production (E&P) space sold his interests for $60 million prior to the energy downturn. He invested some of the sale proceeds in a mix of marketable securities including stocks and bonds, while putting the rest to work in distressed private company shares.

Once the energy market stabilized and economic sentiment improved, he was hoping to purchase another business that he thought had great potential based on its current valuation. With the proceeds from the prior sale fully invested, he needed to raise cash.

Gaining liquidity

His J.P. Morgan Private Bank advisors met with him and reviewed several strategies that would provide funding for the new business purchase. The first option was to sell a portion of the stocks and bonds he held, but this would incur capital gains taxes. Another option was to use the stock and bond portfolio as collateral for a floating rate credit line. However, the business owner was concerned that rates would rise faster than he could pay down the line. His preference was not to disrupt his investment strategy by selling shares too early. He also owned a vacation home in California in addition to a ranch in Texas, and could consider borrowing against these properties, locking in a fixed rate while rates are still relatively low.

After reviewing all of these scenarios, the business owner decided on a combination of strategies: he liquidated a small portion of his investment account and implemented a medium-size credit line, which he felt he could pay down within 12 to 18 months. For the bulk of required funds, he borrowed against his properties with a long-term fixed rate loan. The business owner appreciated the borrowing options available and the flexibility they provided.


For a J.P. Morgan Private Bank energy-focused banker near you, please contact pb.energy@jpmorgan.com.


This material is intended to help you understand the financial consequences of the concepts and strategies discussed here in very general terms. The strategies discussed often involve complex tax and legal issues. Your own attorney and other tax advisors can help you consider whether the ideas illustrated here are appropriate for your individual circumstances. JPMorgan Chase & Co. does not practice law, and does not give tax, accounting or legal advice. We are available to consult with you and your legal and tax advisors as you move forward with your planning.

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Not a commitment to lend. All extensions of credit are subject to credit approval. Loans collateralized by securities involve certain risks and may not be suitable for all borrowers and investors. A decline in the value of securities pledged as collateral may require the borrower to provide additional collateral and/or pay down the loan or line of credit in order to avoid the forced sale of the securities by the lender. Please read your loan documents carefully so that you understand your obligations.

This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. J.P. Morgan Securities LLC or its brokerage affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer. The views and strategies described herein may not be suitable for all investors. The discussion of loans or other extensions of credit in this material is for illustrative purposes only. No commitment to lend by J.P. Morgan should be construed or implied. This material is distributed with the understanding that we are not rendering accounting, legal or tax advice. You should consult with your independent advisors concerning such matters.

J.P. Morgan Private Bank” is a marketing name for private banking business conducted by JPMorgan Chase & Co. and its subsidiaries worldwide. Bank products and services, including certain discretionary investment management products and services, are offered by JPMorgan Chase Bank, N.A. and its affiliates. Securities are offered by J.P. Morgan Securities LLC, member FINRA and SIPC.

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