Magazine article American Banker

Chase CEO Says Banks' New Focus Means Lasting Strength for Industry

Magazine article American Banker

Chase CEO Says Banks' New Focus Means Lasting Strength for Industry

Article excerpt

WASHINGTON -- Thomas G. Labrecque, chairman and chief executive of Chase Manhattan Corp., said the banking industry's revival will endure because the business has fundamentally changed.

"Banking is a much more focused business," Mr. Labrecque said at a press conference here Tuesday night. "That's healthy. It allows us to really pick the businesses we do well."

Focusing on specific businesses also will help banks avoid lemming-like disasters.

Playing Follow-the-Leader

During the 1980's banks followed each other from crisis to crisis: farm, energy, LDC, real estate lending. Mr. Labrecque said he does not think another industrywide credit problem will arise. "I think the herd instinct has slowed down a lot," he said.

Mr. Labrecque said that is one reason Chase will not set up a retail operation in Mexico if the North American Free Trade Agreement is ratified.

Other than in Hong Kong, Chase plans to focus its retail banking in the United States.

"You have to have real added value" to enter new retail banking markets, he said. Chase would have to be able to take deposits and make loans better than local bankers in Mexico.

"It's a high-fixed-cost, low-variable-cost business, and with that you need market share," he said. "From my point of view, it's not a good use of our capital."

That said Mr. Labrecque added that he is big fan of Nafta.

"It's absolutely essential for this country," he said of the free-trade treaty, predicting that Nafta will lead to job growth and an economic boom. …

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