BANK MERGER MANIA : Shipley Moves to Top Spot in Bank Industry
When Chemical Banking Corp. combined operations with Manufacturers Hanover Corp. in 1991, Chemical’s chief, Walter Shipley, took a back seat to Manny Hanny’s head, John McGillicuddy.
When Chemical agreed to acquire Chase Manhattan Corp. in a proposed transaction valued at $11 billion, however, Shipley assumed the top spot, as he had at Chemical after McGillicuddy retired in 1993.
For Shipley, Monday’s move was worth waiting for: It would be the largest banking transaction on record, promising to create the biggest bank in the United States.
Shipley had no apology about taking the top position in the planned new bank over Chase President Thomas Labrecque.
“It was only fair,” Shipley said, since he’d taken a back seat once before.
The 59-year-old Shipley also joked, “I’m older than he is.”
Labrecque, 56, who would serve as the No. 2 executive in the new company, said, “He’s older and taller.”
Shipley, who at 6 feet, 8 inches is probably one of the tallest banking chiefs in the United States, would supplant Citicorp Chief Executive John Reed as the industry’s most powerful leader. The Chemical-Chase bank would have assets of nearly $300 billion. Citicorp, the reigning No. 1 bank, has assets of $257 billion.
Shipley was flushed with a sense of triumph when he spoke with reporters Monday morning.
“It feels great,” he said. “What we have done here is create something that is unique. This partnership is something that is rare.”
The transaction would serve the banks’ key constituents, Shipley said: their shareholders, customers and employees. The pressure is already on Shipley to live up to the expectations of shareholders.
He has plenty to live up to. While all mergers require a lot of work, those in the financial services industries can be particularly difficult, because the main assets are people, not machines. If too many professionals exit a newly combined institution, the transaction can backfire.
Linda Stromberg, an analyst with M.R. Beal & Co., predicted that the biggest challenge Shipley will have is “working around the differences. Banks that merge need a dominant philosophy. His problem is that Chase Manhattan has a much better name in the market than Chemical. But Chemical looks at the bottom line more than Chase.”
Shipley is an unabashed team player. In a photo found in the 1992 annual report after Manny Hanny and Chemical combined operations, he sat behind McGillicuddy, who stands nine inches shorter than the towering Shipley. To make certain that his cohort boasted a more prominent position, Shipley even moved his chair a few inches back.
Shipley “never had a second guess about the arrangement,” Robert Allen, a friend and frequent golfing partner of Shipley, told Business Week magazine in 1993.
Shipley, a native of Newark, N.J., graduated from New York University and received an MBA from Harvard Business School.
Mindful that the pro football season is approaching, Shipley said that putting the two banks together was “like combining the rosters of the Giants and the Jets.”
Of course, the Giants last won the Super Bowl in 1990-91. The Jets haven’t won pro football’s big prize since 1968-69. Further, in the last five years, six men have served as head coaches of New York’s two National Football League squads.
Shipley had better be better at merging banks than analogies.
