Monday, April 24, 2006

Chase Manhattan Bank: A Reunion

A little-known integration occurred this past year. When Banc One and Chase (ok, JP Morgan Chase) merged, two former Chase-executive-led pieces of banking were rejoined. Banc One contained, among its various components, the old First Chicago Bank.

A few years before I joined Chase Manhattan, in 1983, it experienced an internal conflict which, to judge from the then still-audible echoes, rivaled that of the English Reformation. Chase's eventual COO, Tom Labrecque, had marshalled support to defeat an opposing team of senior executives in order to claim the mantle of succession passed down from, and through, the legendary David Rockefeller. David's presence was still felt at the bank, if only as a guiding spirit. The losing faction, led by Barry Sullivan, departed to run First Chicago. As I was told, such was the animosity, that Sullivan's compensation package allegedly included the provision that he would be paid slightly more than whatever the CEO of Chase Manhattan was earning.

From a longer-term perspective, the re-integration of these two Chase management teams reinforces a lesson for me. Strategies, size and specific economic conditions notwithstanding, the split didn't really matter after all.

Now, those two asset bases, and much, much more, including the very large and also mediocre old Chemical and Manufacturers Hanover Banks, are all one larger group of unremarkably-managed assets and businesses. In the end, to this point, it didn't matter what route the businesses took, nor who ran them. A consolidating industry slammed them all together under ever more colorless and less strategically innovative management.

Thus, the observations of my friend and colleague, B (he still plies his trade in parts of the industry) have come to pass. A few very large, faceless, nearly-identical financial "utilities" now dominate the sector.

More on this in my next post.

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