Bank megamerger to cost 10,000 jobs

CEOs of Bank One, J.P. Morgan Chase hold meetings in N.Y., Chicago

January 16, 2004|By Mark Skertic | Mark Skertic,CHICAGO TRIBUNE

CHICAGO - Months were spent crafting the sale of Bank One Corp. to J.P. Morgan Chase & Co., a $58 billion stock swap that creates the nation's second largest bank. Yesterday, the more intimate work of stitching together two vastly different cultures began.

Wall Street appears to have embraced the combination. For the banks' chief executive officers, the equally crucial work of convincing employees and customers that the deal is a good one is under way.

"Mergers have a certain flow," said William B. Harrison Jr., J.P. Morgan's CEO and chairman. "They have differences, you have issues you have to work out. You have cultural issues, you have different business models. We're all aware of that.

"None of this is a shock. We know what to expect."

Harrison and James L. "Jamie" Dimon, his Bank One counterpart, have both experienced the messy business of meshing different corporate cultures while trying not to alienate customers and investors.

It will mean merging the East Coast investment banking culture of J.P. Morgan Chase with Bank One's Midwestern, retail banking roots. Harrison will remain the CEO, with Dimon becoming chief operating officer. By 2006, Dimon will take over for Harrison, according to the agreement the pair reached.

The merged bank will be leading a financial giant, with an estimated $1.1 trillion in assets.

Details of the deal emerged yesterday: Plans call for drawing from the top executives of both banks to create the new management team, and managers at least three levels deep have already been appointed to ensure a smooth transition, Dimon and Harrison told analysts.

Over the next three years, the new bank will shed 10,000 jobs - some through attrition, others via layoffs.

Both the Federal Reserve Board and the Justice Department will review the deal, said Brian Smith, partner in the Washington office of Mayer, Brown, Rowe & Maw and former chief counsel in the Office of the Comptroller of the Currency.

There is little overlap with the banks' branches. One area that might be questioned is the size of the combined banks' credit card operation; it will trail only Citigroup among the largest issuers.

Dimon and Harrison told investors they hope the sale will close in the second quarter.

Yesterday, they focused on quieting fears and answering questions. An hour before the stock market opened, the two were in New York explaining to Wall Street analysts how the deal was structured.

That hour-long session was followed by a meeting with employees at J.P. Morgan's Manhattan headquarters. Then Dimon and Harrison flew to Chicago for a similar session in Bank One's corporate office in the Loop. The meetings attracted everyone from bank tellers to upper management. Those who couldn't attend could watch close-circuit broadcasts and Webcasts.

At both meetings, they assured employees that the new bank would boast a strong national presence and hold a significant place in world finance.

Investors reacted favorably. Bank One's stock closed at $50.42 yesterday, up 11.5 percent. J.P. Morgan Chase closed at $38.92, down 0.8 percent.

Chicago Tribune correspondent Leon Lazaroff in New York contributed to this report. The Chicago Tribune is a Tribune Publishing newspaper.

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