Thursday, September 14, 2000

Venerable banking firms' merger keeps up with times

The Associated Press

        NEW YORK — The combination of banking powerhouses Chase Manhattan and J.P. Morgan in a $35.2 billion merger is a classic example of two venerable institutions joining forces to meet the future challenges of an increasingly global economy.

[photo] J.P. Morgan CEO Douglas Warner III (left ) and Chase CEO William Harrison Jr.
(Associated Press photo)
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        In this new world order, no institution — no matter how well known or revered — will be immune to the competitive threat posed by bigger corporate juggernauts whose reaches extend around the world, analysts say.

        Not even legendary firms like J.P. Morgan and Chase can rest on their laurels, even with forebears such as J. Pierpont Morgan and Alexander Hamilton.

        Indeed, analysts say Chase's acquisition of J.P. Morgan would make sense both to J. Pierpont and his father, Junius P. Morgan. It was Junius who, almost 150 years ago, saw the importance of a global banking presence. And it was J. Pierpont who later consolidated his father's U.S. and European operations under one roof, leveraging the firm's power on both continents.

        Chase Manhattan's origins go back even further, beginning in 1799 when the Manhattan Co. was established with the help of Hamilton and Aaron Burr to help improve New York's water supply and fight a yellow fever epidemic. A successor company eventually combined with Chase National Bank in the mid-1950s to form Chase Manhattan Bank, which became an international powerhouse under the leadership of David Rockefeller. It later merged with Chemical Bank, which had earlier combined with Manufacturers Hanover.

        “Nothing is sacred, and that's how it should be. ... That is the essence of capitalism. That's how J.P. Morgan built his business,” said Morton Pierce, head of the mergers and acquisitions group at Dewey Ballantine, a New York advisory firm.

        Both names will be retained in the newly formed J.P. Morgan Chase & Co.

        The combined firm will have about $668 billion in assets, rivaling Bank of America Corp., with about $679 billion in assets, as the second-largest bank holding company in the United States. It will still trail Citigroup, which had $791 billion as of June 30.


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