The Chase-Chemical Merger
The merger of Chemical Banking Corp. and Chase Manhattan would end Citicorp's 13-year reign as the largest bank in the United States. The new Chase, with $297 billion of assets, would be No. 1 in this country - but only No. 21 worldwide. Other new titles: No. 1 U.S. mortgage servicer.
The top executives of Chemical and Chase said they expect market clout, cost reductions, and technology capabilities will add up to a handsome payback on the $10 billion merger deal they announced.
The 12,000-employee cut envisioned points to a much less populated future for the financial services industry. In the meantime, Chase and Chemical managers may have morale problems on their hands as the ax hangs over 16% of their workers.
The architects of the merger have decided that the nation's next No. 1 bank will use a state charter. The move would cost the Office of the Comptroller of the Currency prestige and more than $8 million a year in fees.
Bank stocks rallied sharply on the day the deal hit the news.
Though Chemical executives would dominate the merged bank, Chase's approach to retail investments seems likely to prevail. It's expected that the combined company would consolidate much of its investment management and sales operation.
Card industry observers are wondering who will rise to the top of what would be the fourth-largest credit card business in the country.
Banking regulators are expected to approve the blockbuster merger, but not without a fight from community activists. By virtue of its sheer size and its impact on the New York City market, the deal is likely to spark protests under the Community Reinvestment Act.
Community banks in the New York metropolitan area are licking their chops over the prospect of winning branches, customers, and executive talent as Chase and Chemical merge.
Premium Cut Will Go Mostly to Bottom Line
Bankers do not plan to cut loan rates once deposit insurance premiums drop and the industry's expenses are shaved by $4.5 billion a year, a Federal Reserve survey shows. The benefits of lower premiums will flow mainly to the bottom line.
Opening the door for thrifts to collect billions of dollars in damages, a federal appeals court ruled against the government in a key goodwill case. It said the government is liable for its 1989 decision revoking thrifts' right to count supervisory goodwill as capital. It was not clear whether the government would appeal.
A dozen more banks have written to protest the government's plan to capitalize the Savings Association Insurance Fund through a one-time fee on thrift deposits.
BayBanks to Merge Its Mass., Conn. Units
Following the lead of others moving toward interstate branching, BayBanks said it will merge its three banks covering Massachusetts and Connecticut. Chairman William M. Crozier Jr. said customers should notice no difference.
Japan's merging giants prize their U.S. banking jewels, but Bank of Tokyo's affiliate Union Bank of California is such an attractive acquisition target that investors considering its stock should consider the possibility that the bank will be sold, an analyst says.
When Gerald J. Ford became chief executive of First Nationwide last fall, he said he would shed the thrift's widely dispersed branch networks outside California and expand in the state. He may finally be putting this strategy into gear.
Photo: Gerald Ford, p. 3
First Bank System has agreed to buy BankAmerica's corporate trust business. The Minneapolis-based superregional said the deal would make it No. 1 domestically in the specialty.
Deal for Black-Owned Bank Hitting Snags?
Shorebank is still trying to line up $15 million in new capital to finance its acquisition of Indecorp, the nation's largest black-owned banking company.
The poultry business has arrived in a big way in Kentucky, giving family farmers a much-needed source of income. And small-town bankers are carving out a role for themselves by financing it.
Community banks pulled off an 11th-hour win in their battle to limit the impact of the interstate branching law that takes effect nationwide in 1997. A state Senate committee voted to require out-of-state banks to buy a bank to gain entry into the state.
ABA Lawyer Finally Getting Some Respect
John J. Byrne, senior federal legislative counsel at the ABA, once had to fight to get an audience with influential government officials. But now, on topics ranging from money laundering to environmental liability, people want to hear what he has to say.
The OTS kicked off a yearlong regulatory relief campaign this week with a proposal to restructure its rulebook and drop some out-of-date rules.
Tired of mergers and acquisitions, Robin H. Smith has left Fiserv to become the new president and chief executive officer at Formation Technologies, a compliance company in Denver.
Caterpillar Strike Splits Workers' Credit Union
Citizens Equity Federal Credit Union has become a less sympathetic place than it once was for striking workers of Caterpillar As the bitter battle has dragged on, it has decided to stop giving loan deferments to strikers.
CUNA Mutual Group, the industry's chief insurance provider, has long enjoyed a reputation as a cozy place to work. Indeed, visitors to Madison, Wis., bring back stories of how even the taxi drivers want to work there. But there are indications that work demands have gotten tougher.
A former credit union manager who has fought a four-year battle with the federal government is trying to take his case to the U.S. Supreme Court. John R. Doolittle is seeking to overturn a decision that prohibited him from running a federally insured institution and required him to repay $42,857 to Bay Gulf Federal Credit Union for bad real estate loans.
After Lull, Bankruptcies Heading Higher Again
Personal bankruptcy filings may be on the rise after a two-year decline, according to statistics tracked by Visa U.S.A.
The bank-nonbank horse race in automated teller machines is nearing a moment of truth. Sometime in the next few weeks, Electronic Data Systems will complete its long charge to the top, overtaking BankAmerica to become the No. 1 deployer of ATMs in the United States.
Blockbuster Entertainment Group, the video retail giant that issued a cobranded credit card last March, is testing a stored value card in Salt Lake City - without a bank.
First Data said an agreement it has reached with the Federal Trade Commission staff should clear the way for its proposed $6.7 billion merger with First Financial Management.
The fate of AT&T Universal Card Services has become a topic of speculation as its parent contemplates getting back into the local telephone business.
Index-Fund Sales Loads Raising Some Eyebrows
Some banks are now offering index funds - and imposing a sales charge. And some observers question whether it makes sense to charge sales fees for a product that many nonbanks offer without them.
Billie Jean King was one of the tennis greats on hand as Chase Manhattan launched its $2.2 million sponsorship of the 1995 U.S. Open. The company uses the event to build on its upscale image.
Photo: Billie Jean King, today's news
Booming mutual funds sales already help float the boat at Missouri's largest banking company. And the announced acquisition of Fourth Financial will give Boatmen's Bancshares another $700 million of proprietary mutual fund assets. Yet how the banks will consolidate their fund families remains unclear.
Having developed a taste for stock mutual funds, some bank brokerage customers are sampling more exotic cuisines. Aggressive growth and international funds, once considered too spicy for investors at banks, are selling remarkably well, according to sales executives at banks and mutual fund companies.
Fleet on the Defensive At Merger Hearing
Representatives of Fleet Financial Group, on hand for Fed hearings in Boston into the company's proposed merger with Shawmut National, ended up defending the bank's finance unit against charges that it forced elderly and infirm borrowers from their homes.
A merger of bank and thrift charters could call into question the relevance of the popular cost-of-funds index for determining interest rates on adjustable-rate mortgages.
Washington-area lenders and community organizers have formed a group that reviews rejected mortgage applications - and helps turn some into loans.
Whether it's advertisements on the information highway or grass-roots promotions at local American Legion halls, mortgage lenders are in high gear to counter the slump in home lending.
M&I Unit Hires Bank Pro For Electronic Banking
M&I Data Services has recruited Alfred S. Dominick Jr., a retail banking veteran, to bring together its disparate transaction processing and delivery systems and help it take a run at electronic banking.
Agribank has boosted its telecommunications horsepower, using services from MCI to connect to more than 400 Farm Credit Services offices in the Midwest.
First Commerce Bancorp in Georgia has become the first bank to purchase an image-based check processing system developed by Greenway Corp.
Electronic Data Systems has purchased the check processing operation of the Federal Home Loan Bank of Cincinnati.
Banc One Corp. Missing the Boat?
This year's merger merry-go-round is getting to be more like a losing game of musical chairs for Banc One: When the music stops and a deal is announced, it seems the Ohio bank company is always left standing. Many observers say Banc One must soon answer with a deal of its own or risk being left out of the game.
Citicorp has elbowed aside a New York rival to lead a $1.2 billion loan for Johnson & Johnson, market sources said. Some observers expressed surprise that Chase would not be leading the consumer product and pharmaceutical maker's first large syndicated loan.
Citibank has been chosen to lead, with Credit Suisse's help, a $10 billion credit for Walt Disney's acquisition of Capital Cities/ABC.