(Reuters) - Private equity firm Carlyle Group LP (CG.O) on Tuesday named as co-president and co-chief operating officer JPMorgan Chase & Co's (JPM.N) Michael Cavanagh, who had been considered a leading contender to succeed the bank's CEO Jamie Dimon.
Cavanagh is currently co-head of JPMorgan's corporate and investment bank. His move to Carlyle is a testament to the rise of alternative asset managers and the shadow banking sector, as investment banks come under increased regulatory pressure in the aftermath of the financial crisis.
Cavanagh, 48, who will also join Carlyle's executive board, will share both new titles with Carlyle veteran Glenn Youngkin, 47, who has until now been sole chief operating officer, Carlyle said in a statement on Tuesday.
"I have worked at JPMorgan Chase for almost my entire professional life, and it was not without a lot of soul searching that I decided it was time for me to take my career in a different direction," Cavanagh said in a separate statement issued by JPMorgan.
Cavanagh was a member of JPMorgan's operating committee. Daniel Pinto, who had the same role as Cavanagh, was named sole CEO of JPMorgan's corporate and investment banking division.
Cavanagh will be on garden leave at JPMorgan until he joins Carlyle in the summer. Garden leave allows employees to carry on receiving their salary while not actively carrying on their duties.
A top lieutenant to Dimon, Cavanagh was tasked in 2012 with overseeing the bank's internal investigation of the derivatives loss that became known as the London Whale trades.
Before taking his current role at JPMorgan's investment banking arm, Cavanagh headed the unit that manages JPMorgan's cash for corporations and keeps securities in custody for large money managers. Earlier, he served as chief financial officer.
"While we would prefer he stay at the firm, we are glad he is going to a valued client in Carlyle," Dimon said in a statement.
JPMorgan's ties to Carlyle run deep, from leveraged buyouts, where the investment bank advises on and finances the private equity firm's deals, to facilitating its credit investments such as collateralized debt obligations.
The appointments highlight the succession planning under way at some of the major private equity firms, which have been run by their founders for decades.
Now in their 60s, Carlyle's founders -- David Rubenstein, William Conway and Daniel A. D'Aniello -- also poached veteran dealmaker Kewsong Lee from Warburg Pincus LLC last year and named him deputy chief investment officer for private equity.
Cavanagh and Youngkin will manage Carlyle's global operations on a day-to-day basis.
Additional reporting by Aman Shah in Bangalore; Editing by Kirti Pandey and Alden Bentley