THE SLOGAN FOR Chase Manhattan Corp.'s retail bank advertising asks consumers to "profit from the experience."
That motto could be applied to the bank's management as well.
New York-based Chase, like many other banks, was hit hard in the late 1980s and early 1990s. The bank lost $334 million in 1990 and was saddled with billions of dollars of problem assets.
Under Thomas G. Labrecque, who was named chairman and chief executive in 1990, Chase has undergone a turnaround. Still, some investors remain skeptical. As David S. Berry, director of research at Keefe, Bruyette & Woods Inc. in New York, noted, the priceto-earnings ratio makes Chase among the cheapest commercial banks his firm tracks.
"Investors have not really understood what Chase has done," said Mr. Berry.
It's getting harder to miss. Last year, net income at the $102 billion-asset bank jumped 51% to $966 million, reflecting strong growth in core business earnings. Chase also reduced its nonperorming assets by 62% during the year.
And first quarter net income - which soared 138% over the comparable period in 1993 - was a pleasant surprise for Wall Street analysts.
Mr. Labrecque is given credit for leading a reorganization of the bank that included redesigning how some lines of business are structured and scaling back others.
Those changes were accompanied by major back-office consolidations and cost-cutting efforts that carved out some $50 million a year in overhead since 1990.
During that time, the efficiency ratio, or noninterest expense per dollar of revenue, plunged from 70% to 58% - a figure slightly better than those posted by New York money center rivals Chemical Banking Corp. or Citicorp.
At the same time, Chase has made some big investments in technology. In 1993 alone, the bank spent $500 million on computer hardware, software, networks, and systems development.
"I think that the big turning point was three years ago," Mr. Labrecque has said.
"What we have done is created an institution which today has put itself on a platform so it can achieve its goal of being one of the best in the world."
"We spent three years working on a vision of the company, and we've refined our strategies," he said.
Arthur F. Ryan, who rose through Chase's operations ranks to become president and chief operating officer, credits Mr. Labrecque with having an appreciation for technology.
"By the time we reached that difficult period of time, the businesses that needed the technology investments - the retail and transactions businesses - were already producing reasonable earnings. So it wasn't blind faith," he said. "Tom understood the investment had to be made and the earnings were there to justify it."
Chase, with offices in 50 countries, remains a key player in wholesale banking around the world. It has a major presence in global payments and international cash management, foreign exchange, and derivatives trading.
Last year, Chase ranked third in terms of global loan syndication. And with $300 billion of assets under custody, the bank ranks first in the global custody business.
Chase's regional bank, with 340 branches in New York, Connecticut, and New Jersey, has $22 billion of deposits. Chase also operates a number of subsidiaries in the U.S., including three - credit cards, mortgage banking, and auto finance - that are among the largest in the nation.
"Labrecque has tried to define what it is that Chase does for a living," said Mr. Berry. "That has led Chase to exit a lot of businesses, some of them profitable."
So although the bank will offer private banking services to wealthy people abroad, it has gotten out of mass-market consumer banking overseas.
Chase has also shed affiliates in the United States, abandoning what appeared to be a longterm goal of building a nationwide consumer bank. And Chase no longer does the banking for local businesses in markets outside the United States.
Chase information technology executives say the changes at the corporate level have been mirrored in the back office.
"The whole structure of the company - and the mindset of the company - changed dramatically," said Craig D. Goldman, chief information officer.
"We were a group of small companies that never got the economy of scale that goes with being a large company," said Douglas T. Williams, a senior vice president. "But we had all the overhead that goes with a large company."
Mr. Goldman noted that Chase's operations in Manhattan were located in multiple sites, some in older buildings that had asbestos problems and no room to handle a growing, modern computer network.
Chase consolidated much of its data processing and other back office functions in a state-of-the-art building in Brooklyn, just a couple of subway stops from downtown Manhattan. The enormous center, called Metrotech, employs more than 6,000 people.
The development of Metrotech, and the concurrent consolidations, were part of a strategy that had begun earlier. A major goal - and a major achievement for Mr. Goldman - was building a network to link Chase bankers around the globe. Mr. Goldman said that by the end of this year he expects that all but about 6,000 of Chase's 29,000 personal computers will belong to local area networks that are linked through Metrotech.
The aim, said Mr. Goldman, is to have the "client executive in New York be as well equipped as a client executive in Hong Kong - and know the results of a meeting that took place the day before in the other geography.
"This stuff takes an awful long time to deploy. And we've been doing it since 1989 on the distributed [technology] side," he continued. "And the data center consolidation work has been going on at least that long.
"We continued to invest some of the strategic technologies at a time when things were not terribly rosy [at Chase]," said Mr. Goldman.
The managers also credit Mr. Ryan, Chase's president, as a major factor behind the bank's technology initiatives. "A lot of it is driven by Art," said Mr. Williams, "because he comes out of this background and understands how important it is."
"The network had to change as the way capital flows changed," said Mr. Ryan.
A key decision, he said, was to build a single network that linked Chase bankers around the globe. "That meant moving to client/server technology, to distributed computing."
Thus far, the primary use Chase has found for the vast network is as an avenue for groupware from Lotus Development Corp., Cambridge, Mass. The software, called Notes, is available to more than 8,000 Chase bankers.
It has a number of functions, ranging from electronic mail to a customer information file that allows bankers in far-flung locations to keep track of customer relationships around the world. Managers can also tap into news feeds and analyze information.
"We have an awful lot of ideas as to how we can do more with the Notes technology," said Mr. Goldman. "As third-party developers give us more and more software that integrates with that - like workflow and other packages - it's becoming more and more powerful.
"There's a lot more to push over these networks," he said. "If I've got better information than the competition and I'm more knowledgeable about the customer ... I'm going to do better than the competition."
Michael Urkowitz, the executive vice president who heads Infoserv, the bank's global transactions processing and cash management unit, said his business gets enormous value from Notes. At his Metrotech office on a recent afternoon, Mr. Urkowitz said he knew of at least eight teams working in different countries communicating through their PCs.
"I know right now there is a team split between New York, London, and Australia" finetuning a proposal to a large Australian financial institution, he said.
"If we are chosen by a Du Pont or an American Airlines to be their golbal cash manager, we are dealing simultaneously with two, three, or four decision centers," he continued. "We all have to be constantly drawn together."
To demonstrate, Mr. Urkowitz booted up his computer and clicked onto Notes. He was greeted with electronic messages from four continents.
"Once you were able to use organization to get synchronized behavior," he said. "But if you look at our business, we can organize around customers, products, geography. All three are relevant. But you can only pick one. And so you need to use other tools to get integrated behavior. Technology does that for us."
In addition to using Notes, Chase employs other technologies such as a worldwide voice mail system and videoconferencing capabilities.
"When I first started in this business, we kept investing in technology just for the purpose of efficiency or capacity," Mr. Urkowitz said. "Every dollar I invest now is pretty much aimed at information management or customer access."
And that, he said, has contributed to a rapidly growing business. In 1987, the year Infoserv was formed, it made about $30 million. Within four years it passed the $100 million mark, and earnings continue to grow at a double-digit rate. He added that the number of Infoserv employees has fallen from 6,000 to 5,000 since 1987.
"Technology gives us the ability to handle the ever skyrocketing volume of transactions, and meet the recordkeeping demand," he said. "But more important, it's enabled us to shift our business from settling transactions to providing enormous amounts of valuable information back to our customers."
Chase has also been moving rapidly toward deploying imaging technology. For example, it's now installing PC workstations that will allow corporate customers to retrieve images of checks rather than waiting for a microfiche copy to be drawn from storage.
Chase executives admit, however, that their technology lagged in one major area: the regional bank. "In the past, we have not kept as close to some [banks] who have invested more heavily," said Mr. Goldman. "Luckily, this is the kind of world where you can leapfrog pretty quickly."
He said the bank is retrofitting its branches with a PC-based local area networks. Today, most branches still use socalled "dumb" terminals. "Our total target is 6,000 LAN-able terminals," said Mr. Goldman.
Eugene H. Friedman, vice president of corporate technology information services, said Chase is also looking at emerging technologies, such as a voice-recognition capability and so-called "smart" phones and "smart" cards that include computer chips.
Chase is studying "smart cards in all their flavors, whether it be value cards, debit cards, credit cards, or value-added cards. There's an awful lot of work going on in that area."
And, like a handful of other banks, Chase is experimenting with kiosks that allow consumers to interact with bank personnel through video. Fewer than a dozen are now in use. "A lot of it is experimental because you're doing a lot of market research as you go along."
Mr. Goldman said "there is a mentality in this company that really is very proactive on technology."
And, said Mr. Ryan, "If your organization is a technology business, you have to invest or you'll fall behind."
Jeanne Iida contributed to this article.
