The mood was upbeat last Friday in the third-floor conference area at Chase Manhattan Corp.'s Metrotech operations center in Brooklyn.

Senior executives put on a multimedia show for technology and operations employees, a morale-boosting thank-you for the weekends and late nights they had devoted to integrating Chase and Chemical Banking Corp. systems.

They had met what was arguably the most important deadline in the megamerger - the July 15 target for finishing the systems consolidation that made Chase and Chemical one institution in the eyes of federal regulators.

The Metrotech meeting was one of a series of four that not only celebrated that accomplishment - known internally as "Day 2" - but also illustrated the complexity of the task and the critical role of teamwork. Executives were visibly relieved that they had come through unscathed.

Denis O'Leary, Chase's chief information officer, was up-front about his angst: "My feeling was that there would be fender benders."

The Day 2 projects were difficult, Mr. O'Leary said - creating single general ledger, check clearing, funds transfer, and overseas branch systems for a $300 billion institution.

But by the reckoning of analysts and other observers, the consolidation went smoothly and quickly.

Analysts credited the operation's speed to two elements: the organization for carrying out the consolidation and the fact that many key executives had come through the merger of Chemical and Manufacturers Hanover Corp. in 1991.

The Day 2 integration affected 54 business units, 7,000 interdependent bank functions, and 67 pairs of technology platforms.

As Chase's 70,000 employees brace for the third and last round of consolidation - the merging of retail businesses and the start of branch closings on Labor Day - executives stopped to ponder what they had accomplished.

Last fall, bank officers drew up a schedule for system conversions called the merger overview model, or MOM. Three huge color posters depicting the schedule dominate the bank's boardroom at 270 Park Ave.

On several fronts, Chase is ahead of schedule.

The bank has projected first-year operational savings from the merger of $510 million. And in the first three months after the April 1 merger closing, it realized 29% of that amount, said Joseph G. Sponholz, chief administrative officer and head of the merger office.

Much of the savings came from greater-than-expected employee attrition, said Mr. Sponholz. By July, more than 4,000 had voluntarily departed, putting the bank well ahead of schedule toward the 5,000 job cuts projected for yearend.

Chase executives said Day 2 didn't pass without some glitches. A fire broke out in one of three power generators. Rains from Hurricane Bertha leaked through a ceiling. Electrical storms caused sporadic power outages.

But all projects were completed on schedule.

Day 2 required completion of a 34-page list of tasks. At the operating sites, team leaders followed a 7,000-page script and reported project completions by telephone.

Well before July 15, top officers had decided which systems ultimately would be used in the merged institution. The strategy was significantly different than the department-by-department deliberations that bogged down the Chemical-Hanover merger.

"We thought we were being smart the last time," said Mr. Sponholz, a Chemical alumnus. But under the old method "we had to work harder to knit the banks together. It turned out to be more costly and more involved."

Securities analysts said the streamlined selection process will contribute significantly to Chase's meeting its cost-saving goals.

"Although the task this time is larger and more complicated, it has been made easier and faster by doing the conversion on a suite by suite basis," said Diane Glossman of Salomon Brothers Inc., New York.

By choosing software "suites" instead of individual applications, Chase officials asserted, they avoided political infighting between people from the Chemical and Chase backgrounds.

Privately, some executives admitted emotions occasionally flared up and slowed progress.

"We put the whole organization on fast forward," said Mr. Sponholz. "We didn't want to create conflict or ambiguity."

Decision makers chose the Chemical funds transfer system, folding in selected Chase products.

"The architecture was more in line with what we wanted, and the system was newer," said Lorraine E. Hricik, head of global payments. "Chemical had spent a lot of money on building it in their last merger."

The Chase system won out for global custody. Other choices were based on Chase "front-end" technology with Chemical applications on the back end.

"We wanted to take advantage of investments in technology that had already been made," said Mr. O'Leary. "The risk with a merger is a meltdown. But we ended up with the best of both worlds."

Now that critical back-office functions have been merged, executives are setting their sights on retail applications, estimating that the complete consolidation will take three years.

Six major data processing centers will be combined in four, said Mr. O'Leary. Chase also plans to close 100 of its 600 branches. And at least 40 technology integrations - two-thirds of the total - are still ahead.

"We feel we are building something," said Mr. O'Leary. "I told my colleagues at Manny Hanny that the merger with Chemical was a once-in-a- career event. I hope I'm wrong again."

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