In the 19 months since its merger with Manufacturers Hanover Trust Co., Chemical Banking Corp. has moved less than half of its trust and global custody customers to a unified accounting and reporting system.
The conversion is critical for Chemical's competitiveness in a market beset by price wars and consolidation.
The bank expected to have all 500 overseas accounts on the system, dubbed Chemtrust, by the end of 1992. Most of those accounts were originally Hanover customers.
But by June of this year, all the overseas customers and nearly half the domestic ones remained on the old systems.
Merging the two banks' global custody businesses proved so complex that the timetable had to be rethought late last year, Chemical officials said.
Aiming for Early '94
The revised schedule for installing the necessary software focuses on getting domestic customers onto the new system first. All customers are to be moved by early 1994.
In the first six months of this year, Chemical moved half of its more than 5,000 master trust accounts to the new reporting software, from Premier Systems Inc., Wayne, Pa.
"We're very pleased with our progress," said Jeremiah O'Leary, general manager, global securities services, at Chemical.
Before the merger, Chemical and Hanover were midsize players in securities processing and custody. The merged bank hopes to make use of its size to achieve economies of scale that will make it more competitive with the biggest custody banks.
Chemical is estimated to have $150 million to $200 million in revenues from master trust and global custody services, and profits of between 10% and 20%. Growth has been relatively flat, according to a well-placed source.
Chemical began testing the software in its Cardiff, Wales, data center late last year with about 50 overseas Chemical accounts. It planned to move the rest of its overseas customers by the end of 1992.
Instead, after some testing, Chemical moved the test accounts back to the existing Chemical system and decided to focus on moving master trust customers.
Mr. O'Leary said the change in plans was due to the complexity of merging the overseas operations and offices of the former Hanover with Chemical.
It was determined that some software enchancements required to accommodate former Hanover customers could be better implemented, according to a source close to the project who requested anonymity.
Chemical still expects to have domestic customers on the system by the end of 1993. But overseas customers won't be moved to the system until late 1993 to early 1994.
Many bankers believe it is important for global and domestic trust systems to be compatible, so customers can see all of a pension fund's assets on a single screen. U.S. customers are increasing their investments overseas, and reducing the distinction between domestic and international services.
Now Chemical is in the first phases of designing a consolidated securities tracking system to underlie the system.
Chemical is currently using two securities movement and control systems -- one from the old Hanover to handle domestic activity, and one from Chemical to handle overseas accounts.
The systems manage securities processing, tracking such transactions as dividend collections and settlement practices in different countries and time zones.
"It is in our plans to build one integrated [tracking] system to handle all types of currencies and all types of instruments," Mr. O'Leary said.