After three months of searching, Bank One Corp. picked the person on everyone's short list from day one.
In naming former Citigroup Inc. president James Dimon its new chairman and chief executive officer late Monday, Bank One moved a long way to rebuilding confidence - at least on Wall Street - that the company was moving closer to resolving its operational problems.
Mr. Dimon, 44, joins the $265 billion-asset Chicago banking company at a time of upheaval. The company has issued a string of profit warnings tied to its underperforming First USA Inc. credit card operation. Those have also led to a wave of executive departures and contributed to a mood of divisiveness in the executive suites.
He succeeds John B. McCoy, who resigned in December under pressure from his board and shareholders, ending the McCoy family's 64-year management of Bank One and its predecessor companies. Verne G. Istock, who was Bank One's acting chief executive during the interim, will continue as president and director.
The appointment comes after an extensive search led by John R. Hall, an outside director who was named non-executive chairman of the banking company in December. Mr. Dimon, who was rumored to be a leading contender for the job almost from the beginning, brings a "fresh perspective," Mr. Hall said in a statement. "His ability to galvanize employees also set him apart."
Shares of Bank One Corp. surged almost 10% Monday in a down market as investors cheered first the rumor, then the news, of the appointment, which was revealed after the close of trading. The company's stock value had been cut by half since the first profit warnings last summer. Shares of Bank One rose $2.75, to close at $31.125.
Investors said they were enthusiastic about the CEO appointment because it removes much of the uncertainty that was associated with the banking company.
There is no longer a question about who is going to run the company, said James Ellman, a buy-side analyst for Merrill Lynch Asset Management. "For the short-term this will be a positive for Bank One's stock."
Not everyone was as optimistic about Mr. Dimon's appointment.
"It clears away uncertainty, but they are bringing in a CEO that has virtually no experience in commercial banking and no direct experience in crucial areas such as credit cards and middle-market lending," said Lawrence Cohn, an analyst at Ryan Beck & Co. "I view this as a high-risk hire."
Of particular interest to some market watchers was the prospect that Mr. Dimon would recruit from outside the company to replace a number of high-level executives who have left since the banking company's trouble began last year.
"By hook or crook, he'll get value out of the company," said Lori Appelbaum, an analyst at Goldman Sachs & Co.
Mr. Dimon was a long-time protege of Sanford I. Weill, chairman and co-chief executive officer of Citigroup, and was considered the heir apparent to the top job at that $718 billion-asset financial services conglomerate until his ouster in the fall of 1998.
His departure from Citigroup came just six months after the merger of Travelers Group and Citicorp. At the time, Mr. Dimon was said to be blamed internally for the slow integration of Salomon Smith Barney with Citicorp's global corporate bank.
The announcement Monday also touched off a new round of speculation about Bank One's long-term independence. Market watchers said Mr. Dimon could repair the ailing Bank One and then eventually sell it to Citigroup.
The fact that Citigroup is also searching for an eventual successor may be adding fire to that speculation. Mr. Weill indicated last month that he may be willing to retire in two years. That admission was prompted by the surprise announcement by his partner as Citigroup's co-CEO, John S. Reed, that he would retire in April.
A sale of Bank One to Citigroup would bring Mr. Dimon back as its CEO and heir apparent. Plus, investors said, such a transaction would make sense. "It would enable Sandy Weill to get one last big acquisition in before he retired, while bringing in a tested CEO," Mr. Ellman said.
