Marriages Multiply in Banking Industry: Chase-Chemical Latest

Article excerpt

ONE giant merger after another is shaking the United States banking industry. The latest, between Chemical Banking Corp. and Chase Manhattan Corp., was announced yesterday. The combined institution, to take the Chase name, will be the largest bank in the nation with almost $300 billion in assets. That deal dwarfed two other major mergers also announced yesterday: * Cleveland-based National City Corp. has agreed to buy Integra Financial Corp. in Pittsburgh for $2.1 billion. * In St. Louis, Boatmen's Bancshares Inc. announced plans to buy Fourth Financial Corp., a Wichita, Kan.-based institution, for $1.2 billion. "We have too many banks," says Paul Nadler, a professor of finance at Rutgers Graduate School of Management in Newark, N.J. The US has more than 10,000 commercial banks, plus thousands more thrift institutions, investment banks, and other financial institutions that can do some of the same business activities as banks themselves. "We will see more mergers," says Colleen Pantalone, a finance professor at Northeastern University in Boston. "It is a natural result of deregulation and an attempt to be competitive internationally." "The financial-services industry is in the midst of the greatest period of consolidation in its history, and we are seizing upon a truly unparalleled opportunity to create a premier global financial-services company," stated Walter Shipley, chairman and chief executive officer of Chemical. He will take the same position in the merged bank. The two banks figure the merger will result in a cost savings of $1.5 billion within three years, or about 16 percent of combined 1995 operating expenses. Some 12,000 positions from a combined staff of 75,000 located in 39 states and 51 countries are to be eliminated. "What am I going to do to get jobs for my students?" asks Professor Nadler. Bank employment in general has been declining across the nation, partially because of the arrival of automatic-teller machines and computerization in general. Mergers, by eliminating jobs, are "hard on people," adds Nadler. But they "make sense. This is where banking has to go." Mergers, however, may even be helpful to some small banks. "Giant mergers, such as this one, provide an opportunity for independent banks ... to provide a variety of services to business and individuals who may feel disenfranchised by large banks," says Edward Liebenstein, executive vice president of Sterling National Bank and Trust Co. …