Posted on: Tuesday, June 15, 2004
Bank megamerger gets Fed's approval
By Marcy Gordon
Associated Press
WASHINGTON — The Federal Reserve cleared the way for Wall Street powerhouse J.P. Morgan Chase & Co. to combine with Chicago-based Bank One Corp., forming the nation's second-largest bank with more than $1 trillion in assets.
The Fed's board of governors, including Chairman Alan Greenspan, voted 6-0 yesterday to approve the megamerger, finding that the investment firm's acquisition of the bank would not threaten competition or unduly concentrate banking resources.
The $58 billion deal will eliminate about 10,000 jobs by 2006 and the Bank One name sooner, in one of a series of consolidations in the financial services industry. Some experts believe the combination will shift the U.S. banking industry landscape, setting off a cascade of deals among mid-sized institutions while creating opportunities for community banks to steal customers away.
The central bank's order noted that J.P. Morgan Chase and Bank One "compete directly" in seven markets in Delaware, Florida and Texas. The Justice Department, in a separate review, also concluded and advised the Fed that the merger "likely would not have a significantly adverse effect on competition in any relevant market."
After the Fed's announcement, the two companies said they had set 12:01 a.m. EDT on July 1 as the effective time of their merger. Both banks' shareholders have approved the all-stock merger, as have state regulators.
New York-based J.P. Morgan Chase already is the No. 2 U.S. bank, with assets of some $801 billion and operations in more than 50 countries. Bank One, the sixth-biggest bank with branches in 13 Midwest and Southwest states and in Florida, has $320 billion in assets and over 51 million credit cards issued.
The new institution, with about 2,300 branches, will have assets estimated at $1.12 trillion, trailing only titan Citigroup Inc. It will be headquartered in New York but will retain Chicago as the base for some retail operations.
Losing a Fortune 100 company will be a blow to Chicago, which has lost the top billing for several large corporations through mergers or closures in recent years.
The proposed acquisition, announced in January, raised alarm among an array of community groups that voiced concern about big banks getting bigger.
"The Federal Reserve has taken to coddling predatory and payday lenders and the banks which support them," Matthew Lee, executive director of Inner City Press-Community on the Move said in a statement Monday. "Combining these two portends badly for moderate-income consumers, communities of color and small businesses nationwide. After Bank One, how long until there's only one bank?"
Both J.P. Morgan Chase and Bank One have promised to continue supporting community development programs as well as to maintain bans on predatory and discriminatory lending tactics.
J.P. Morgan Chase chief executive William B. Harrison Jr., will cede that post in 2006 to Jamie Dimon, who was a Citigroup executive before his four-year stint as Bank One's CEO. Dimon will be president and chief operating officer in the interim.
Oklahoma City's tallest building, the 36-story Bank One Center, is topped with a large Bank One sign on all four sides that likely will be replaced with the Chase logo. Bank One Ballpark in Phoenix, home to the Arizona Diamondbacks and known as BOB, will have to change its name.
