Chase Manhattan and Chemical Bank, two of America's largest banks, are merging to create the biggest bank in the US and the fourth biggest in the world in terms of shareholders' capital. The merger is designed to push through massive cost savings of pounds 1bn a year.
The new giant in the US banking system will command pounds 200bn assets and pounds 12.5bn of shareholders' equity. Its worldwide operations include a substantial presence in the City and across the UK, with Chase employing some 2,500 and Chemical nearly 1,500.
Asked about lay-offs in Europe, Chemical Bank's chairman, Walter Shipley, said the initial target worldwide was to eliminate 12,000 positions from a total of 75,000, and added that "we would expect to see some proportionality" with regard to Europe. Areas of possible duplication in the UK include processing operations in Bournemouth and Cardiff and banking activities in London.
The new bank will go under the name Chase Manhattan because of the pull of the name worldwide. However, it will be headed by Mr Shipley who has pushed through an aggressive cost-saving programme at Chemical following its 1991 merger with Manufacturers Hanover. Most savings are expected in New York as the two banks cut out branches and rationalise processing activities.
The two chairmen declined to say who had approached whom with the merger, but some analysts see the deal as a takeover of Chase by the financially stronger Chemical.
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