Looking ahead to the merger of Chase Manhattan Corp. and Chemical Banking Corp., card industry observers are wondering who will rise to the top of what will be the fourth-largest credit card business in the country.

Most expect Chemical's management to be dominant - it is the larger of the two banks, and more of its people than Chase's will be in senior management. But neither company is responding publicly to the speculation.

Charles R. Walsh, executive vice president in charge of Chemical's card unit, would appear to have "the inside track," said Patricia Hudson of Porges/Hudson Marketing in San Francisco. She attributed this to the highly successful Shell Oil Co. MasterCard, the cobranded product that has fueled Chemical's growth for more than a year.

Chemical, the ninth-largest issuer with $9.8 billion of receivables, grew 10.1% in the first half of this year. Chase's total was up only 5%, to $10.9 billion, and though it is widely perceived as less aggressive it is still ranked one notch above Chemical.

"Chase has always had the reputation of being the slowest grower," said Robert B. McKinley, president of RAM Research Corp., Frederick, Md.

John A. Ward 3d, executive vice president of Chase's card business since 1993, has launched several innovative products - including Reward Consolidator, a line of credit that tries to attract balances from prominent cobranded cards like Chemical-Shell. But Mr. Ward can't match Mr. Walsh's more than 20 years in the card business. The Chemical executive's involvement dates back to Manufacturers Hanover Trust Co., which merged with Chemical in 1991.

Speculation about the combined card business is not limited to its leadership. Other questions involve whether the new Chase will continue to process cards in-house at its Delaware facility or, like Chemical Bank, will rely instead on First Data Corp.

"From the First Data perspective, (the merger) creates great opportunities and risk," said Richard Weingarten, vice president of Montgomery Securities, who follows the transaction processing field.

AT&T Global Information Solutions, which has the exclusive contract to supply automated teller machines to Chemical, will also be watching closely. Although the new entity will likely remove some ATMs from the New York area, where the two retail banks overlap, it is also likely to upgrade the Chase ATMs to the state-of-art AT&T GIS units.

Combined, Chase and Chemical will have nearly 1,500 ATMs, ranking seventh in the nation.

The fact the new institution will adopt the Chase name led some observers to question whether the Chemical name will fade completely. In the Manufacturers Hanover merger, Chemical's name was deemed more powerful, and it survived.

"Frequently when mergers occur, and there is a powerful brand equity, there is some reluctance to eliminating the name completely," said William O. Adcock Jr., chairman of Synergistics Research Corp.

"Will the banks try to preserve some of the brand equity of the Shell/Chemical Card?" Mr. Adcock asked, noting the strong brand identity built up through aggressive advertising.

Marc Altman, senior vice president of marketing and sales for First of America Bank Corp., contends such mergers will make the card industry even more competitive "because people who are still in it want that much more" market share.

"Over the last five years, the top 25 or 50 issuers kept taking a bigger share of the total market," Mr. Altman said.

He said midsize banks like First of America "will stay in the business by being smarter and introducing products targeted to profitable niches."

Ken McEldowney, executive director of Consumer Action in San Francisco, disagreed, saying big mergers tend to reduce competition.

California banks that have merged, he noted, seldom "passed on cost savings to the consumer."

This article includes reporting by Valerie Block, Robert Jennings, and Beth Piskora.

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