JANUARY 14 — John J. McCloy, chairman of the Chase National Bank of the City of New York, and J. Stewart Baker, chairman of the Bank of the Manhattan Co., in a statement to the press today announced that their respective boards of directors "are in agreement on basic terms to merge the two institutions."
The resultant $7.5 billion bank, to be called "The Chase Manhattan Bank," would be second largest in the United States and largest in New York City. It would operate under the State charter originally granted by the New York legislature in 1799 to the Manhattan Co.
The proposal is subject to approval of two-thirds of the shareholders of each bank, and to the banking authorities. The continuing institution would be a member of the Federal Reserve and FDIC.
Mr. McCloy and Mr. Baker would be chief executive officers, with Mr. McCloy being given the title of chairman, and Mr. Baker chairman of the executive committee and president.
Percy J. Ebbott, president of Chase, has agreed to continue as a vice-chairman of the combined institution, although he has reached retirement age, in order that the continuing institution may have the benefit of his knowledge and experience in the integration and administration of the business of the two banks.
Graham B. Blaine, vice-chairman of Manhattan, is to continue in that position and Lawrence C. Marshall, who is now president of Manhattan, will become an executive vice-president of the continuing institution.
Also, Edward L. Love, George Champion and David Rockefeller, who at present are senior vice-presidents of Chase, are to become executive vice-presidents of the continuing institution. It is further contemplated that all other personnel of the two banks will continue with the combined institution.
Based on the Dec.31, 1954, published figures the enlarged institution would have total resources in excess of $7,500,000,000. Its capital funds would approximate $500,000,000.
It was emphasized in the statement to the press that "the merger would result in a joinder of the two banks rather than a taking over of one bank by the other." The first board of directors of the combined bank is to consist of 15 members of the board of directors of Chase and 10 members of the board of directors of Manhattan.
Terms of Merger
The terms agreed on provide that upon the merger the continuing institution will have outstanding 12,000,000 shares of common stock. Upon the merger becoming effective, the stockholders of Chase will become holders of 1¼ shares of the capital stock of the Manhattan Co. for each share of capital stock of Chase held by them, and the stockholders of Manhattan will continue to hold the number of shares of capital stock held by them prior to the merger. There are now 7,400,000 shares of Chase stock and 2,750,000 shares of Manhattan stock outstanding.
"It is the present expectation that the combined earnings will enable the enlarged bank to pay dividends at the annual rate of $2.20 per share on stock to be outstanding after the merger," the statement to the press said.
The combined institution would have a city-wide system of 87 offices, which will effectively cover the business and residential areas of the city, with 37 offices in the Borough of Manhattan, 35 in the Borough of Queens, nine in Brooklyn, and six in the Bronx. "There is no problem of overlapping in the branch locations of the two banks in the four boroughs where they operate," it was added.
Chase, prominently identified in commercial and world-wide banking, would bring to the continuing bank, in addition to its local branches, its 17 branches in England, France, Germany, Japan, Cuba, Puerto Rico, Panama and the Canal Zone, and its five representatives' offices in Mexico, Argentina, Italy, India and Lebanon.
In confirming their plans for the merger, Messrs. McCloy and Baker emphasized their purpose "to unite the two banks solidly on a basis which would reflect in terms of directorship and management positions the concept of the merger as a joinder of forces of the two banks."
In a joint statement Messrs. McCloy and Baker said, "With similar characteristics of management, personnel and operational practices, and with a wide diversity of branch locations and customer groups, this merger enables the continuing institution to keep full pace with the expanding economy of the city, the State and the nation." The statement went on to say:
"We are confident that this merger will be of substantial benefit to the customers, shareholders and personnel of both banks. It will serve the public interest by providing a broader and more comprehensive range of banking facilities to small and large business concerns in the city and the nation, as well as overseas, and at the same time afford complete banking and trust services for individual customers."