Chase Weighs California Purchase

State Charter Would Advance Private Banking Strategy

SAN FRANCISCO -- Chase Manhattan Corp. is considering whether to buy a commercial bank in California to establish a private banking foothold, a company official said.

Chase has not decided to buy and has no specific target in mind, senior vice president Deborah L. Talbot said in an interview.

The New York banking company, the nation's third-largest, has aimed its national retail strategy at people with high income and net worth. Ms. Talbot said any Chase purchase is likely to be small; the company has no interest in acquiring a large retail branch network to serve the mass market.

Chase has private banking offices in Los Angeles and San Francisco, which has $1 billion in assets under management for customers with at least $250,000 in annual income. Private banking is one of nine business lines that Chase offers in California. Others include corporate finance, mortgage lending, and auto lending.

A banking charter would let the company add deposit-taking services to existing private-banking and lending relationships.

After deciding to build its California private banking business, Chase last June began to study the value of a local bank charter. The plan was put aside in September when the company ran into loan problems and began a major restructuring, Ms. Talbot said. It was resurrected several months ago as Chase began recovering and two major trust banking companies, Northern Trust Corp. of Chicago and U.S. Trust Corp. of New York, obtained bank charters in California.

Other out-of-state banks that have bought California commercial banks as the state permitted interstate acquisitions are Citicorp, U.S. Bancorp, based in Portland, Ore.; and Comerica Inc., based in Detroit

Chase will make a decision before completing its 1992 capital budget, Ms. Talbot said. "The pros [of an acquisition] probably outweigh the cons, but I'm not sure there is a compelling reason."

Whether or not it gets a charter, Chase wants to double its private banking assets under administration in California. It is considering opening offices in San Diego, Orange County, and somewhere in Northern California. "We've got to get a lot bigger than we are now," Ms. Talbot said.

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