Chemical's Fogarty Hints at Post-Merger Growth Plans
Private bankers at Chemical Banking Corp. and Manufacturers Hanover Corp. have little to worry about, according to their boss.
Despite plans to lay off at least 6,500 employees after the two banks merge, most of their 1,600 private banking employees will keep their jobs, said John Fogarty, executive vice president in charge of Chemical's private banking division.
"Business is healthy and it's growing," so a full staff is needed, Mr. Fogarty said. "It's growing year to year."
$37 Billion to Manage
Mr. Fogarty, 51, the former executive director of the United States Tennis Association, is the designated head of the combined banks' private banking unit. His new empire will manage $20 billion of personal investments for the wealthy and $17 billion of trust assets.
The trust portfolio will make Chemical the biggest personal trust manager in the United States. On the personal investment side, it will still trail several banks, including Citicorp, which has three times as much under management.
Rivals said Mr. Fogarty could build a strong empire at Chemical, where top executives are emphasizing businesses that bring in fee income, such as trust banking.
Chemical's huge portfolio "definitely means that they're going to be a very profitable organization," said Deborah Talbot, head of U.S. private banking at Chase Manhattan Corp.
Strategy in Flux
Mr. Fogarty would not disclose specifics of his post-merger strategy, saying officers of both banks are still hammering out details. But he clearly is enjoying the new resources at hand. It's not necessary to be the biggest banker in the country, Mr. Fogarty is quick to say, but "I think it is important to be a leader."
The tanned Mr. Fogarty is looking to bolster Chemical's affluent market business in the New York region as well as in California and Florida, where both banks want to grow.
The new Chemical also may consider buying a federal savings bank charter in Florida, which would permit it to make commercial loans there. J.P. Morgan & Co. made a similar move earlier this year.
Focus on New Wealth
Integration of the two banks' private banking sectors will be aided by similar strategies. Both have tried to work more closely with their strong retail and middle-market divisions. The emphasis is on tapping the newly rich rather old wealth.
Rivals, however, are not waiting for the new Chemical to coalesce its power. "Any disruption creates market opportunities," said Susan Rau, head of private banking and trust services at Marine Midland Banks Inc. The Buffalo-based bank, she said, has been trying to take advantage of "customer fallout" among Chemical's and Hanover's New York clientele.
Mr. Fogarty, a former head of international private banking at Citicorp, denied speculation that Chemical would make a push into private banking outside the United States with the new alignment. "We don't see ourselves with an international expansion plan," he said.
Member of the Club
Mr. Fogarty is generally thought of as a private banker's private banker. He graduated from Harvard University, rubbed shoulders with the jet set in his days at the tennis association, and built a broad base of contacts at Citicorp.
His second-in-command at the merged bank will be Michael Cassell, Hanover's 47-year-old head of private banking. The two say they are partners, with Mr. Cassell serving as Mr. Fogarty's chief operating officer.
During an interview, the two appeared to echo each other's thoughts, though Mr. Fogarty clearly was the leader. Mr. Cassell, who took the private banking reins at Hanover last year, is a team player who will work well with Mr. Fogarty, according to someone who knows them both.
Despite Mr. Fogarty's assurances of stability and continuity, some bankers said, the fate of other senior executives in the division is yet to be decided.
In domestic private banking for example, Hanover's Robert Garver is vying against Steve Laserson and John Fox, who share responsibility for the domestic business at Chemical.
The two organizations have set up a private banking steering committee. Its Chemical members are Mr. Fogarty, Mr. Turner, and Patrick Scollard, Mr. Turner's chief of staff. The Hanover contingent is made up of Mr. Cassell, Michael Hegarty, who will run the combined banks' branch business, and William Jordan, Mr. Hegarty's chief of staff.