When Walter Shipley ascended to the chairmanship of Chemical Banking Corp. in 1983, few people were privy to whatever ideas he had about where he wanted to take the company.

Invariably described as a quiet man who leads more by orchestration than by proclamation, Mr. Shipley initially said little to raise outsiders' expectations for what was then the sixth-largest U.S. bank, one of the old money-center breed that was searching for the keys to a revival.

The chief executive's actions eventually did all the necessary talking. Analysts now praise Mr. Shipley for a virtuoso performance, which included three of the landmark merger deals in recent banking history.

The topper came in 1995: the record-setting, $10 billion merger accord with Chase Manhattan Corp. Because it typified and magnified this year of structural upheaval in banking, the company's chairman-elect, 60-year-old Walter Vincent Shipley, gets the American Banker's designation as Banker of the Year for 1995.

Though he engineered the creation of the biggest U.S. banking company and generated headlines for precisely that reason, Mr. Shipley downplays the importance of size.

In his modest and understated manner, which seemed perfectly suited to make the point in a recent interview, Mr. Shipley said, "Size for the sake of size is not a big deal."

"People ask me what would I do if someone else merges and we are no longer the largest American bank," he stated. "I say that is not a criterion that is important to us ... Being the most consistently and highly profitable is what we wish to achieve over time."

"Size in the aggregate is not important," he explained. "But size per business is important."

A larger capital and investment base, he said, gives Chemical and Chase the opportunity to be big in each of the businesses they decide to concentrate on. With their $300 billion of combined assets, more than $40 billion bigger than Citicorp, that list gets quite long: ranging from local retail and middle-market banking to global wholesale and correspondent services, from mutual funds and private banking to investment banking and trading, from credit cards to mortgages and all types of consumer lending in between.

When Mr. Shipley and his counterpart at Chase, Thomas G. Labrecque, announced their pact on Aug. 28, they put out a list of 13 distinct business lines with market share measures. The new Chase would be No. 1 in 10 of them and no lower than No. 4 in the others.

The emphasis on "size per business" comes right out of the book of John F. Welch Jr., the chairman of General Electric Co., who has been a major influence on business executives of every stripe. Thanks to Mr. Shipley, Mr. Welch's ideas on business portfolio management are filtering as never before into the banking industry.

"Jack Welch has articulated it in many ways," Mr. Shipley said. "He is saying, 'We are a very diversified company, but we want to be a leader in each of the businesses we are in.'

"That's our philosophy. If we can't be a leader, then we either have to figure out a way to correct that by acquisition or merger, or we have to go the other way and get out of the business."

Now basking in that luxury of selectivity while deriving inspiration from the singular Mr. Welch, Mr. Shipley may finally be completing his hard-earned credentials for full membership in the American corporate elite.

Born into a banking family - his father and brother were in the business - Mr. Shipley began his long journey toward industry leadership in 1956, before he received a college degree. He was working at New York Trust Co. when, in 1959, Chemical Bank came calling with a merger deal, providing what Mr. Shipley regards as one of his formative experiences.

Chemical, two to three times the size of its target, "called it a merger," Mr. Shipley recalled. "But it behaved like an acquisition. I was hardly unique among the New York Trust Co. people who felt a bit like they weren't quite first-class citizens."

Mr. Shipley would remember that disillusionment as he led Chemical into the merger frays of the 1980s and 1990s. But first he had to earn his stripes, particularly in international banking during the last golden age of overseas activity for U.S. banks.

In 1979 he was named senior executive vice president for worldwide wholesale banking, his springboard to becoming president and a director of the holding company in 1982. In October the next year, just shy of his 48th birthday, Mr. Shipley rose to chairman and chief executive officer.

He stepped into the ample shoes of Donald C. Platten, whom Mr. Shipley remembers as "a special person" and from whom he "learned a tremendous amount." Though highly respected among New York bankers, Mr. Platten was outshined by his generation's leading lights, Citicorp's Walter Wriston and Chase Manhattan's David Rockefeller.

Even Mr. Shipley's six-foot, eight-inch frame did not bring automatic parity with those giants. But the Wriston-Rockefeller era was ending, clearing the way for hands-on pragmatists like John Reed at Citicorp, Mr. Labrecque and Arthur Ryan at Chase, Dennis Weatherstone at J.P. Morgan, and Charles Sanford at Bankers Trust.

Though Mr. Shipley fraternized with the new generation, he owed his career and allegiance to the old, and many observers failed to see his ability and desire to break from the past.

"We certainly didn't think at the beginning that he would do as good a job as he did," said PaineWebber Inc. analyst Lawrence W. Cohn.

Ironically, Mr. Shipley's throwback tendencies - he puts a premium on personal relationships and admits to a less-than- encyclopedic grasp of technology - may have worked in favor of the crucial negotiations that made his mark.

Ten years ago this month, he announced a merger agreement with Texas Commerce Bancshares, a quantum leap into interstate banking that did not deliver on its potential until Texas recovered from recession in the 1990s. Mr. Shipley never lost faith in the wisdom of that investment; he was characteristically more concerned about "social issues."

"Even though Chemical Bank was significantly larger, the philosophy of that was a merger," Mr. Shipley said in the interview. "We called it a merger, not an acquisition," a pointed reference to New York Trust Co. in the 1950s.

"I went on the stump saying New York is not better than Texas, big is not better than small, and sometimes small is beautiful. We followed a philosophy of inclusion, making our new partners in Texas feel they were truly equal. That was very much influenced by the experience back in 1959 where I saw how much negative energy is created when you don't make it an inclusive process."

Mr. Shipley said he repeated the pattern in 1989 with Horizon Bank, Chemical's foray into New Jersey, which recently gave the company a chance to test the flip side of its bigness principles. When it determined it could not grow into a leader in southern New Jersey, Chemical sold out for $490 million to PNC Bank Corp. - and put the proceeds back into core businesses.

Pundits did not begin to put Mr. Shipley in the front ranks of money center leadership until Chemical's $2 billion merger with Manufacturers Hanover Corp. in 1991, a textbook in-market combination capable of wringing significant overcapacity - hundreds of millions of dollars of overhead out of the system.

Even then, the Fates did not fully cooperate in the building of Mr. Shipley's reputation. For two years he took the back seat of president to Manufacturers Hanover's chairman, John G. McGillicuddy, who stayed as Chemical CEO until his retirement on Jan. 1, 1994. But behind the scenes, Mr. Shipley got involved in the inner workings of the merger, which would serve him well in the bigger integration challenge to come.

Mr. Shipley said he "learned a lot from John McGillicuddy in the two years we had together." He acknowledged they "were not identical people (and) came at things differently," but they bonded in the heat of battle and felt vindicated by the outcome.

"John and I talked about a merger of equals," Mr. Shipley said. "We got criticism for that. Some people said you couldn't have a merger of equals, that somebody has to be in charge.

"We proved you can do a merger of equals and it can be extremely successful. We're attempting the best we can to do it in the merger with Chase, being inclusive and making people feel participative."

Mr. Shipley seems remarkably serene in the face of that most daunting task, the integration of $188 billion-asset Chemical with the $120 billion asset Chase. He expresses confidence on all fronts: in the advantages of size, in the management team he has assembled, in what they learned from the Manufacturers Hanover transaction and their ability to complete the Chase merger even more quickly and effectively. And he must be enjoying the critical acclaim.

"He has plugged away and improved the organization substantially," said Mr. Cohn of PaineWebber. "There were clear opportunities to do damage, and he avoided them."

"He is a low-key guy with a good sense of humor, which makes him great to work with," said Jill Considine, chief executive of the New York Clearing House Association. A former New York State banking superintendent, Ms. Considine remembers how Mr. Shipley gave his time to educate examiners and answer their questions.

"He is very thoughtful about banking and has a good vision of the industry and its future, which I think we're seeing in his leadership at Chemical," Ms. Considine said.

From the inside, vice chairman Edward D. Miller describes Mr. Shipley as "a very fair individual who will strive for consensus and a sense of team. He is obviously willing to make bold moves - and knows how to pursue them."

To Mr. Shipley, management quality revolves around his vice chairmen, Mr. Miller and William B. Harrison Jr., and the "well- controlled but decentralized managerial environment" they have assembled around them.

"It's no longer possible to run this company the way I was able to when I became chairman of the old Chemical Bank in 1983, when I could keep my finger in every pie," Mr. Shipley said. "The more decentralized approach requires outstanding talent, and the process of merging now three banks into one is a wonderful way to create an absolutely top management team."

"He has some very smart people in that organization, which is a great credit to him," said Charles Wendel, a New York-based banking consultant and a student of management styles. "He wants his executives to actually run their new, larger businesses, and gives them freedom to move."

Mr. Shipley reserves special praise for Mr. Miller, who is spearheading the Chase-integration effort but whose achievements as a retail banker are said to put him at the top of many a CEO headhunter's list. "He's a dynamo - I think he is better than anybody else in the banking industry today," Mr. Shipley said.

The chairman need not fear a loss of devotion. "This is my passion," Mr. Miller said. "In five years, we've gone from two organizations that lacked scale and market presence to one that will have a tremendous franchise and strategic advantage. If I didn't believe in that, I'd probably be out doing something else."

More important, according to Mr. Miller, the entire organization has pulled together.

"Building consensus is essential, and Walter is very good at that," Mr. Miller added. "But he also knows where to pick the battles - where consensus is important, and where there is a danger of getting bogged down. If you try to get consensus everywhere, you won't get anywhere."

"We will end up with a market capitalization of roughly $25 billion," Mr. Shipley said. "That gives us a lot more flexibility if we need to do anything to fix a strategic gap. (But) we only want to be in markets where we can be No. 1 or No. 2. If we can't get there, then we figure out something else."

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