* Union says 'Whale' loss is reason to divide JPMorgan
* AFL-CIO fund says bank has become too big to manage
* Another union group targets Bank of America, Citigroup
By Rick Rothacker and David Henry
Jan 24 (Reuters) - A federation of U.S. labor unions is looking to force JPMorgan Chase's board to consider breaking up the company after the disastrous "London Whale" affair, but the bank is trying to ensure that its shareholders do not get to vote on the union's proposal.
The largest U.S. bank is seeking permission from the U.S. Securities and Exchange Commission to omit the proposal from the measures that shareholders vote on this spring, according to a letter sent to the agency on January 14.
The proposal, from the AFL-CIO's Reserve Fund, a union fund that owns JPMorgan shares, calls on bank directors to form a committee that would explore "extraordinary transactions that could enhance stockholder value," including breaking off one or more of the company's businesses. The panel should hire third-party advisers and make a report to shareholders 120 days after this spring's annual shareholder meeting, according to the proposal.
Similar proposals have also been filed with Bank of America Corp, Citigroup Inc and Morgan Stanley, by another union, the American Federation of State, County & Municipal Employees, said Lisa Lindsley, AFSCME's director of capital strategies.
JPMorgan has become too big manage, the AFL-CIO proposal said, citing more than $6 billion in losses last year by a trader nicknamed the "London Whale" in the bank's Chief Investment Office in London.
"In our view, the evidence is mounting that JPMorgan has reached the point where stockholders would benefit from restructuring," the AFL-CIO said in its proposal.
In its letter to the SEC, lawyers for JPMorgan said the proposal should be blocked from being included in the bank's proxy filing because it involves the company's ordinary business, an exclusion allowed under SEC rules. The letter also says the proposal includes "false and misleading" statements and is "vague and indefinite."
Spokespersons for JPMorgan and the SEC declined to comment on the proposal.
In response to a question in an interview on Fox Business Network on Thursday, JPMorgan CEO Jamie Dimon said there is no reason for the bank to break up or spin-off businesses.
"We are in four businesses. They are all doing very well," he said. "There is a lot of cross-sell. We have good returns on capital, third year of record profits. There is no reason for us to contemplate something like that."
Heather Slavkin Corzo, senior legal and policy advisor with the AFL-CIO, said the union is preparing a response to JPMorgan's letter for the SEC. The union hasn't previously submitted a proposal calling for this kind of action, she said.
"We think it's important that they take a look at some potential extraordinary transactions that could maximize shareholder value," Slavkin Corzo said.
Bank of America, Citigroup and Morgan Stanley are also seeking to omit AFSCME's proposal from their proxies, Lindsley, the director of capital strategies said.
Citigroup sent a letter to the SEC on Dec. 21 asking for permission to leave out the proposal, according to the agency's web site. Morgan Stanley and Bank of America made similar requests to the agency, according to letters provided by Lindsley.
Bank of America and Citigroup declined to comment. Morgan Stanley was not immediately available for comment.