Ask Marc J. Shapiro what Chemical Banking Corp.'s merger with Chase Manhattan Corp. has meant for Texas Commerce Bank and he sums it up in two words - international sales.
"Since the merger, the single biggest difference has been on the international side," said the 49-year-old chairman of Texas Commerce, Chase Manhattan's $22 billion-asset Texas subsidiary.
"Our ability to pick up a phone, call a customer, and transact business has been infinitely enhanced," he said.
For Chase, Texas Commerce constitutes a ready-made vehicle for delivering local corporate-banking services in the fast-growing Southwest. Those services include trade finance, loan syndications, foreign exchange, and merger and acquisition advice.
These days, the clout that comes from the Chase affiliation counts for a lot in Texas, where an increasing share of corporate revenues is linked to international business and banks ranging from Texas Commerce to NationsBank Corp. are vying to be lenders of choice to these businesses.
In the Houston metropolitan region alone, according to a recent survey, international business directly or indirectly supports more than one third of some 1.7 million jobs.
"Houston always was an international city but has benefited enormously from the internationalization of the U.S. economy," Mr. Shapiro added.
"Ask any business where their future lies and they'll likely say selling internationally," he said.
To be sure, Texas Commerce is not the only bank beefing up its international operations in the Lone Star State. NationsBank, Banc One Corp., and some two dozen big foreign banks are also vying for a piece of the growing market for international banking services.
"Texas Commerce has done a credible job in this market," acknowledged Darin Narayana, president of Banc One International Corp., the new Dallas- based international unit of Banc One "But this market is so huge no one bank dominates and we certainly plan to give the competition a run for their money."
But Alan Buckwalter, vice chairman and head of corporate and international banking at Texas Commerce, scoffs at such challenges.
"There is no real competitor in our markets, and I'm talking about Texas and the contiguous states, who has the kind of overseas network Chase has and that we have ready access to," he said flatly.
"You can have all the product in the world, but if you can't get your foot in the door you won't sell anything."
The current exuberance at Texas Commerce sharply contrasts with the more somber mood that prevailed after Chemical took over the Texas bank for $1.2 billion in January 1987.
Over the next several years, Texas Commerce confronted a weak economy and mounting real estate losses that forced its new parent company to provide it with hundreds of millions of dollars in fresh capital.
But there was a silver lining to the otherwise gloomy situation. As other big Texas banks collapsed or were taken over in interstate merger deals over the next few years, the fresh capital, coupled with stability in management and operations at Texas Commerce, enabled the bank to pick up a large number of new corporate customers.
Executives at Texas Commerce and analysts believe a couple of important factors will help protect banking in Texas from the kind of upheaval that occurred 10 years ago: the rapid diversification of the Texas economy over the last few years, and the growth of high-tech and service trades to supplement the traditional reliance on energy and agricultural products.
"They've taken a lot of the excess out of the economy," observed Lawrence Vitale, a bank analyst with Bear, Stearns & Co. "There's a more- balanced mix."
Actually, international banking was probably the last thing on Chemical's mind when it acquired Texas Commerce as part of a bid to diversify away from retail and wholesale banking in New York City.
With 124 branches around the state, Texas Commerce has historically focused on corporate banking for companies with $100 million to $500 million in annual sales, especially in Houston, the Dallas- Fort Worth region, and other leading commercial centers. Chemical didn't even bother to change Texas Commerce's name, and since being acquired the bank has been pretty much left to run itself, sharing transactions with its parent in New York as opportunities arise.
The Chase-Chemical merger has added a new dimension to strategic thinking at Texas Commerce, which until recently directed most of its efforts to strengthening retail and middle-market corporate banking. Executives emphasized the merger has been felt across the board in large corporate, middle-market, and private banking as Texas Commerce pulls into play Chase's capabilities in trade finance, capital markets, cash management, derivatives, foreign exchange, syndicated lending, and mergers and acquisitions.
"The merger gave us a tremendous competitive advantage that will make a big difference to us over the next several years," said Edward Robinson, executive vice president in charge of the private banking unit, which manages some $16.5 billion in institutional and private assets. "We can invest in places like Asia using money managers we didn't have before."
The merger has also meant that Texas Commerce can offer financing techniques Chase developed for larger corporations to small- and midsize companies.
"We're moving further down the food chain," said Mr. Buckwalter.'
Analysts find little reason to dispute Texas Commerce's claims to having a competitive edge.
"Those kinds of capabilities are not vital to every customer but they are differentiating and are becoming more important over time," remarked David Berry, a banking analyst at Keefe, Bruyette & Woods Inc.
With third-quarter earnings at Texas Commerce up 41% to $72 million and earnings for the first nine months up 30% to $202 million, Chase certainly has little to complain about. And, unlike some other money-center and big West Coast banks, which have announced plans to scale back their presence in Texas, Chase intends to stay in Texas.
"We have no plans to sell Texas Commerce," said Chase chairman and chief executive Walter Shipley, dismissing speculation that the big New York City based bank might be tempted to unload its Texas subsidiary. "Texas Commerce will continue to be tightly linked into the rest of our global franchise."
