Chemical Banking
Encyclopedia
Chemical Bank was a bank with headquarters in New York City
from 1824 until 1996. The bank operated as the primary subsidiary of the Chemical Banking Corporation, a bank holding company established in 1988. At the end of 1995, Chemical was the third largest bank in the U.S. with approximately $182.9 billion in assets.
Beginning in 1920 but accelerating in the 1980s and 1990s, Chemical was a leading consolidator of the banking industry in the United States, acquiring Chase Manhattan Bank
, Manufacturers Hanover, Texas Commerce Bank
and Corn Exchange Bank
among others. Following Chemical's acquisition of Chase, the bank adopted the venerable Chase
brand. What had been Chemical Bank is at the core of what today is JPMorgan Chase.
Chemical Bank was headquartered in New York City
with more than 39,000 employees globally as of the end of 1995.
, Chemical was the third largest bank in the United States in terms of total assets with $182.9 billion of assets. The Chemical Banking Corporation was the fifth largest bank holding company in terms of total assets.
Of Chemical's $182.9 billion of total assets, the bank held approximately $82.1 billion of loans, representing a balance between mortgage loans and other consumer loans as well as commercial loans in the U.S. and internationally. Among Chemical's largest international exposure was to Japan, Germany and the United Kingdom. The other asset's on the bank's balances sheet included cash as well as various debt and equity
securities.
Chemical reported record net income of $1.8 billion for 1995. Chemical's level of capital at the end of 1995 remained strong, with capital adequacy ratio
s well in excess of regulatory requirements. The Corporation's Tier 1
and Total Capital
ratios were 8.5% and 12.1%, respectively.
Chemical was one of the leading banks in the U.S., active both in corporate banking as well as retail banking
. Within retail banking, Chemical provided personal and commercial checking accounts, savings
and time deposit account
s, personal loans, consumer financing and mortgage banking as well as trust and estate administration.
Chemical's corporate banking business provided a wide variety business loans, leasing, real estate financing, money transfer and cash management among other services. Chemical was among the leading bank lenders to small and medium sized businesses. Chemical also had a significant presence in investment banking
as well as underwriting corporate debt and equity securities
.
. In 1848 the bank agreed to sell its building to its neighbor Barnum's American Museum
(the building collapsed during Barnum's subsequent remodeling) and in 1850 the bank moved into its newly constructed headquarters at 270 Broadway. Chemical bought additional land adjacent its 270 Broadway building in 1879 and 1887 but its offices remained modest through the turn of the century.
In 1907 the bank constructed a new headquarters on the original and adjacent properties at 270 Broadway. In 1921, Chemical acquired a 13-Story building belonging to the Shoe & Leather Bank on Broadway, next door to and surrounded by its existing properties. Despite expanding its 1907 headquarters over the years, by the mid-1920s Chemical was in need of additional space to accommodate its growth and reflect its increasing profile.
In 1926, the bank made plans to move again, this time constructing a new six story location at 165 Broadway, on the corner of Broadway
and Cortlandt Street, closer to the Financial District
. Chemical moved into its new headquarters in 1928, after completion of the building, and the bank's headquarters would remain at that location for more than five decades.
Under Chairman Donald Platten, Chemical's headquarters were to move to 277 Park Avenue
in 1979. The bank moved across Park Avenue in 1991 to occupy the former headquarters of Manufacturers Hanover Corporation
at 270 Park Avenue
, which is still the headquarters of Chemical's successor, JPMorgan Chase. However, JPMorgan Chase returned to 277 Park Avenue
in 2000, following the departure of its previous tenant, Donaldson Lufkin & Jenrette. In 2008, following JPMorgan's acquisition of Bear Stearns
, the bank relocated its investment banking
groups from Chemical's old headquarters to 383 Madison Avenue
.
together with the original directors of the company, John C. Morrison, Mark Spenser, Gerardus Post, James Jenkins, William A. Seely and William Stebbins. Additionally, Joseph Sampson
, although not a director was among the largest of the original shareholders of the bank. The founders used the manufacturing company, which produced chemicals such as blue vitriol, alum
, nitric acid
, camphor
and saltpeter
, as well as medicines, paints, and dye
s as a means to securing a bank charter
from the New York State legislature. During the 1820s, prospective bankers found that they were more likely to be able to successfully secure a charter if the bank were part of a larger business. The following year, in April 1824, the company successfully amended its charter to allow Chemical to begin its banking practice. As a result, Chemical Bank was originally a division of the New York Chemical Manufacturing Company. Balthazar Melick was named the first president of the bank, which catered to merchants in New York City.
John Mason
became a shareholder of the bank in 1826 and would serve as Chemical's second president. Mason, who would later be referred to as "the father of the Chemical Bank," and was one of the richest merchants of his day in New York, succeeded Baltus Melick in 1831. Mason was responsible for establishing the highly conservative business culture of the young bank that would persist for nearly 90 years. For its first twenty-five years, the bank paid no dividends, nor did it pay interest on its customers deposits. Mason was also responsible for leading Chemical through the Panic of 1837
. When a speculative bubble collapsed on May 10, 1837, banks suspended payment of gold and silver. Although twenty years later, Chemical would stand alone and continue to make payments in specie
, in this crisis the bank followed others in suspending payments. Chemical was one of the earliest to resume payments in specie.
Mason died on September 26, 1839, but his legacy of conservatism was taken on by his successors. Isaac Jones and later his cousin John Quentin Jones would lead Chemical, both serving as president, across the next forty years through 1878. Both Isaac and John Jones had close connections to John Mason
, particularly Isaac who married one of John Mason
's three daughters. The Mason and Jones families would maintain effective control of Chemical for much of its first five decades. John Q. Jones was succeeded in 1878 by George G. Williams, who had joined the bank in 1842 and served as cashier of the bank from 1855 onward. In that position, Williams was also inculcated in Chemical's conservative style of banking. Williams would serve as president from 1878 through 1903.
In 1844, when New York Chemical Manufacturing Company's original charter expired, the chemical company was liquidated and was reincorporated as a bank only, becoming the Chemical Bank of New York in 1844. Among the bank's first directors under its new charter were Cornelius Roosevelt
, John D. Wolfe, Isaac Platt and Bradish Johnson, as well as the bank's president John Q. Jones. The company sold all remaining inventories from the chemical division as well as real estate holdings by 1851.
Two years later, in 1853, Chemical became a charter member of the New York Clearing House
, the first and largest bank clearing house in the U.S. Two Chemical presidents would also serve as head of the clearing house, with John Q. Jones serving from 1865–1871 and George G. Williams serving in 1886 and from 1893–1894.
During the Panic of 1857
, Chemical Bank earned the nickname "Old Bullion" by taking a stand that it would continue to redeem its bank notes in specie
throughout the crisis. The panic, which had hit banks and caused a number of failures, led banks across the country to suspend specie payments and turn to issuing paper promissory notes. Chemical's decision was highly unpopular among its fellow banks and led to the bank's temporary suspension from the New York Clearing House
, of which Chemical was a charter member. While hundreds of banks closed, including 18 banks in New York in a single day, Chemical developed a reputation for stability. This reputation proved extremely important in Chemical's growth during subsequent recessions during the 1860s. Chemical frequently used the refrain "Good as gold then, good as gold today" in advertisements from the 1860s well into the 20th century.
Chemical received its national charter as the Chemical National Bank of New York in 1865, at the urging of the secretary of the treasury. This allowed Chemical to issue government-backed national bank notes, the forerunner to paper money. By the early 1870s, Chemical had accumulated deposits in excess of $6 million.
A contemporary perspective of Chemical from 1893 described the bank as follows:
, a prominent banker of the era, was named president of the bank in 1903 after the death of the previous president George G. Williams. Porter would leave Chemical seven years later to become a partner at J.P. Morgan & Co.
in 1910 and was succeeded by Joseph B. Martindale, who was named president in 1911.
In 1917, Chemical named a new president of the bank, Herbert Twitchell, after the death of Joseph B. Martindale. It was uncovered, just months after Martindale's death, that the former Chemical president had stolen as much as $300,000 from the account of Ellen D. Hunt, a niece of Wilson G. Hunt.
Twitchell initiated a major turnaround of Chemical, setting up a trust business and reversing Chemical's policy of not paying interest on cash accounts. These steps along with other initiatives, resulted in an increase in deposits from $35 million to $81 million by 1920. In 1920, Twitchell was succeeded by Percy H. Johnston and remained with the bank as chairman of the board. Johnston would hold the presidency of the bank through 1946 at which time the bank had grown to become the seventh largest in the U.S.
In 1920, Chemical completed its first major acquisition, merging with Citizens National Bank. The acquisition of Citizens National, a small New York commercial bank, increased Chemical's assets to more than $200 million with more than $140 million of deposits. In 1923 Chemical established its first branch and by the end of the 1920s had opened a dozen branches in Manhattan and Brooklyn as well as a branch in London, its first international presence.
In 1929, Chemical reincorporated as a state bank in New York as Chemical Bank & Trust Company and merged with the United States Mortgage & Trust Company, headquartered on the Madison Avenue and 74th Street. During the Depression-era of the 1930s, Chemical's deposits grew by more than 40% and in 1941, the bank reached $1 billion of assets. During this period, Chemical also established Chemical National Company a securities underwriting business.
and only five years later merge again with the New York Trust Company.
Chemical completed its largest acquisition to that point, in 1954, merging with the Corn Exchange Bank
to become the Chemical Corn Exchange Bank. Founded in 1853, the Corn Exchange Bank was based in New York City
, but had built a network of branches in other states through the acquisition of community banks. The merger with the Corn Exchange Bank added 98 additional branches to Chemical's system largely in the New York City and $774 million in deposits.
In 1959, the bank, now known as Chemical Corn Exchange Bank, merged with New York Trust Company, effectively doubling the size of the company. New York Trust Company, which had a large trust and wholesale-banking business, specialized in servicing large industrial accounts. At the time of the merger, Chemical Corn was the fourth largest bank in New York and New York Trust was the ninth largest bank and the merger created the third largest bank in New York, and the fourth largest in the U.S. with $3.8 billion of assets. Following the merger, the bank dropped the usage of the "corn exchange" from the corporate name to become the Chemical Bank New York Trust Company.
In 1968, Chemical reorganized itself as a bank holding company which allowed for more rapid expansion. Throughout the early 1960s Chemical had begun to expand into New York's suburbs, opening branches on Long Island
and in Westchester County. However by the late 1960s and early 1970s, Chemical was focused on building its international business. In these years, Chemical opened new offices in the Frankfurt, Germany (1969), Zurich, Switzerland (1971), Brussels, Belgium (1971), Paris, France (1971) and Tokyo, Japan (1972).
In 1975, Chemical acquired Security National Bank, which had a branch network on Long Island
.
(1986) and Horizon Bancorp (1986) as well as its attempted takeover of Florida National Bank
(1982).
Chemical and Florida National Bank
agreed, in 1982, to enter into a merger, after laws preventing interstate banking were lifted, giving Chemical an option to acquire the business. In February, 1982, Southeast Banking Corporation
(SBC), which had been rebuffed in its attempted to acquire Florida National sued to obtain an injunction against the Chemical merger. In early 1983, Southeast Banking Corporation dropped its takeover attempt and agreed to exchange their Florida National shares for 24 FNB branch offices and other consideration. Following the deal with SBC, Florida National was cleared to merge with Chemical, however interstate banking acquisitions were still prohibited by Federal law and required state legislative approval. With the 1990 deadline running out for its option to buy Florida National and no sign of state legislative approval, Chemical Bank sold their 4.9% interest to First Union Corporation
for $115 million.
Chemical completed its largest transaction of the 1980s in December 1986, when the bank agreed to acquire Texas Commerce Bank
. The $1.1 billion transaction represented the largest interstate banking merger in U.S. history to that time. Texas Commerce, which was officially acquired in May 1987, was one of the largest bank holding companies in the Southwestern U.S., with a strong presence in corporate banking for small and medium sized businesses. Chemical did not seek Federal Deposit Insurance Corporation
backing for its acquisition of Texas Commerce although other large Texas banks, First RepublicBank Corporation
(Acquired by NationsBank
) and MCorp Bank (acquired by Bank One), received over $5 billion of support. Ultimately Chemical contributed $300 million to shore Texas Commerce as it continued to suffer losses.
Also in 1986, Chemical agreed to a merger with New Jersey-based Horizon Bancorp, although the merger was not completed until 1989, due again to interstate banking rules.
The bank's holding company, which had been the Chemical New York Corporation was renamed the Chemical Banking Corporation in 1988 following its series of out of state mergers and acquisitions, including Texas Commerce Bank
and Horizon Bancorp.
It was during this period, in the 1980s and early 1990s, that Chemical emerged as one of the leaders in the financing of leveraged buyout
transactions. By the late 1980s, Chemical developed its reputation for financing buyouts, building a syndicated leveraged finance business and related advisory businesses under the auspices of pioneering investment banker, Jimmy Lee
. It was not until 1993 that Chemical would permission to underwrite corporate bonds, however within a few years, Chemical (and later Chase) became a major underwriter of below-investment-grade debt under Lee. Additionally, in 1984, Chemical launched Chemical Venture Partners to invest in private equity
transactions alongside various financial sponsor
s.
In July 1991, Chemical announced that it would acquire Manufacturers Hanover Corporation
in a $135 billion merger transaction. At the time of the merger, Chemical and Manufacturers Hanover were the sixth and ninth largest banks, respectively, by assets. The transaction, when it closed at the end of 1991, made the combined bank, which retained the Chemical name, the second largest bank in the U.S., behind Citicorp both in terms of assets and customers (approximately 1.2 million household accounts in 1991). Chemical adopted Manufacturers Hanover's logo design and moved into its headquarters at 270 Park Avenue
in New York. In corporate banking, Manufacturers Hanover was better established with larger, blue-chip companies, whereas Chemical had been stronger with small- and medium-sized businesses.
Nationally, the combined Chemical bank became one of the largest lenders to U.S. companies and was the arguably the leader in loan syndications globally. Additionally, Chemical took a leading role providing foreign exchange, interest rate and currency swaps, corporate finance services, cash management, corporate and institutional trust, trade services and funds transfer. Chemical operated one of the nation's largest bank credit card franchises and was a major originator and servicer of home mortgages.
In 1996, Chemical acquired The Chase Manhattan Corporation in a merger valued at $10 billion to create the largest financial institution in the United States. Although Chemical was the acquirer, the bank adopted the Chase
brand, which was considered to be better known, particularly internationally. Chase, which had been the largest bank in the U.S. had fallen to sixth, while Chemical was the third largest bank at the time of the merger. The merger resulted in the reduction of more than 12,000 jobs between the two banks and merger related expenses of approximately $1.9 billion.
The bank continued to operate under the Chase brand until its acquisition of J.P. Morgan & Co.
in December 2000 to form JPMorgan Chase & Co.
Throughout all of these acquisitions, Chemical's original management team, led by Walter V. Shipley
remained in charge of the bank. When the combined bank purchased J.P. Morgan & Co., William B. Harrison, Jr.
, who had been a longtime Chemical executive, was named CEO of the combined firm. Additionally, many of Chemical's businesses remaining intact through the various mergers. Chemical's private equity
group for example, was renamed multiple times, ultimately becoming JP Morgan Partners before completing a spin-out from the bank, as CCMP Capital
, after the bank's 2004 merger with Bank One.
. On September 2, 1969, Chemical installed the first automated teller machine
(ATM) at its branch in Rockville Centre, New York
. The first ATMs were designed to dispense a fixed amount of cash when a user inserted a specially coded card. A Chemical Bank advertisement boasted "On Sept. 2 our bank will open at 9:00 and never close again." Chemicals' ATM, initially known as a Docuteller was designed by Donald Wetzel
and his company Docutel. Chemical executives were initially hesitant about the electronic banking transition given the high cost of the early machines. Additionally, executives were concerned that customers would resist having machines handling their money.
In 1982, Chemical initiated the first personal computer based banking system when it launched a pilot electronic banking program called Pronto. Chemical had spent $20 million to develop the software for Pronto. The system, which worked with the ATARI
console, began in New York and served 200 Chemical Bank customers. Pronto was an extension of other electronic banking services offered by Chemical that included a corporate cash-management system and its growing ATM network and was one of the largest early foray by a bank into home computer based banking. However, a year after launching Pronto only 21,000 of Chemical's 1.15 million customers were using the system, in large part due to the high monthly subscription costs that Chemical charged customers to use it. By 1985, it was clear that Pronto, which was heavily promoted by Chemical was growing much slower than anticipated.
In 1985, Chemical and BankAmerica, another pioneer in electronic banking, entered into a joint venture with AT&T
and Time Inc.
, known as Covidea, to market banking and discount stock-brokerage services to computer-equipped households. By combining resources and sharing costs, the four firms hope to reduce the risk of large and protracted losses. Eventually Chemical discontinued its efforts in 1989 at a loss of nearly $30 million.
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
from 1824 until 1996. The bank operated as the primary subsidiary of the Chemical Banking Corporation, a bank holding company established in 1988. At the end of 1995, Chemical was the third largest bank in the U.S. with approximately $182.9 billion in assets.
Beginning in 1920 but accelerating in the 1980s and 1990s, Chemical was a leading consolidator of the banking industry in the United States, acquiring Chase Manhattan Bank
Chase Manhattan Bank
JPMorgan Chase Bank, N.A., doing business as Chase, is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. The bank was known as Chase Manhattan Bank until it merged with J.P. Morgan & Co. in 2000...
, Manufacturers Hanover, Texas Commerce Bank
Texas Commerce Bank
The Texas Commerce Bank was a Texas-based bank acquired by Chemical Banking Corporation of New York in May 1987...
and Corn Exchange Bank
Corn Exchange Bank
The Corn Exchange Bank was founded in 1853 in New York, but had branches in other states, including Pennsylvania, Wisconsin, and Nebraska. It was a retail bank that acquired many community banks. In 1929 it was renamed the Corn Exchange Bank and Trust Company. In 1954 it merged with Chemical Bank...
among others. Following Chemical's acquisition of Chase, the bank adopted the venerable Chase
Chase (bank)
JPMorgan Chase Bank, N.A., doing business as Chase, is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. The bank was known as Chase Manhattan Bank until it merged with J.P. Morgan & Co. in 2000...
brand. What had been Chemical Bank is at the core of what today is JPMorgan Chase.
Chemical Bank was headquartered in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
with more than 39,000 employees globally as of the end of 1995.
Overview of the company
Chemical Bank was the principal operating subsidiary of the Chemical Banking Corporation, a bank holding company. As of the end of 1995, prior to its merger with the Chase Manhattan BankChase Manhattan Bank
JPMorgan Chase Bank, N.A., doing business as Chase, is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. The bank was known as Chase Manhattan Bank until it merged with J.P. Morgan & Co. in 2000...
, Chemical was the third largest bank in the United States in terms of total assets with $182.9 billion of assets. The Chemical Banking Corporation was the fifth largest bank holding company in terms of total assets.
Of Chemical's $182.9 billion of total assets, the bank held approximately $82.1 billion of loans, representing a balance between mortgage loans and other consumer loans as well as commercial loans in the U.S. and internationally. Among Chemical's largest international exposure was to Japan, Germany and the United Kingdom. The other asset's on the bank's balances sheet included cash as well as various debt and equity
Equity (finance)
In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists...
securities.
Chemical reported record net income of $1.8 billion for 1995. Chemical's level of capital at the end of 1995 remained strong, with capital adequacy ratio
Capital adequacy ratio
Capital adequacy ratio , also called Capital to Risk Assets Ratio , is a ratio of a bank's capital to its risk...
s well in excess of regulatory requirements. The Corporation's Tier 1
Tier 1 capital
Tier 1 capital is the core measure of a bank's financial strength from a regulator's point of view. It is composed of core capital, which consists primarily of common stock and disclosed reserves , but may also include non-redeemable non-cumulative preferred stock...
and Total Capital
Tier 2 capital
Tier 2 capital, or supplementary capital, include a number of important and legitimate constituents of a bank's capital base . These forms of banking capital were largely standardized in the Basel I accord, issued by the Basel Committee on Banking Supervision and left untouched by the Basel II accord...
ratios were 8.5% and 12.1%, respectively.
Chemical was one of the leading banks in the U.S., active both in corporate banking as well as retail banking
Retail banking
Retail banking is banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and transactional accounts, mortgages, personal loans, debit cards, credit cards, and so forth.-Types of...
. Within retail banking, Chemical provided personal and commercial checking accounts, savings
Savings account
Savings accounts are accounts maintained by retail financial institutions that pay interest but cannot be used directly as money . These accounts let customers set aside a portion of their liquid assets while earning a monetary return...
and time deposit account
Time deposit
A time deposit is a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time...
s, personal loans, consumer financing and mortgage banking as well as trust and estate administration.
Chemical's corporate banking business provided a wide variety business loans, leasing, real estate financing, money transfer and cash management among other services. Chemical was among the leading bank lenders to small and medium sized businesses. Chemical also had a significant presence in investment banking
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
as well as underwriting corporate debt and equity securities
Equity (finance)
In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists...
.
Lines of business
Prior to its merger with Chase, Chemical was structured into two operating segments: the Global Bank and Consumer & Relationship Banking.- Global Bank The Global Bank serviced the bank's large corporate clients was made up of a traditional investment bankingInvestment bankingAn investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
division, known as Global Banking & Investment Banking as well as a sales and tradingMarket makerA market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. From a market microstructure theory standpoint, market makers are net sellers of an option to be...
division, known as Global Markets. Global Banking & Investment Banking performed advisory services such as mergers and acquisitionsMergers and acquisitionsMergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
and restructuring as well as capital raising functions, such as leveraged loan syndication, high yield financings and other debt and equity underwritingsEquity (finance)In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists...
. The bank's private equityPrivate equityPrivate equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
and venture capitalVenture capitalVenture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
functions were also housed in this division. Global Markets was primarily focused on sales and trading activities, foreign exchange dealingForeign exchange marketThe foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
; derivatives trading and structuring, risk managementRisk managementRisk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities...
and other market related functions. In 1995, Chemicals Global Bank revenue was roughly balanced between investment banking and markets activities
- Consumer & Relationship Banking. Consumer and Relationship Banking was made up of a number of businesses including consumer banking, commercial banking; credit cardCredit cardA credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
s; mortgage bankingMortgage loanA mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
(and other consumer financeConsumer financeAlternative financial services in the United States refers to a particular type of financial service, namely sub-prime lending by non-bank financial institutions. This branch of the financial services industry is more extensive in the United States than in some other countries, because the major...
, i.e. – home equity loanHome equity loanA home equity loan is a type of loan in which the borrower uses the equity in their home as collateral. These loans are useful to finance major expenses such as home repairs, medical bills or college education...
s, student loanStudent loanA student loan is designed to help students pay for university tuition, books, and living expenses. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in education...
s) as well as a number of smaller businesses. Chemical maintained a leading market share position in providing financial services to middle market companies nationally and small businesses in the New York metropolitan areaNew York metropolitan areaThe New York metropolitan area, also known as Greater New York, or the Tri-State area, is the region that composes of New York City and the surrounding region...
. This division also included a small private bankingPrivate bankingPrivate banking is banking, investment and other financial services provided by banks to private individuals investing sizable assets. The term "private" refers to the customer service being rendered on a more personal basis than in mass-market retail banking, usually via dedicated bank advisers...
business, although Chemical was not a leading player in this market.
Offices
The bank opened its first offices at 216 Broadway in Downtown New York in 1824 at the corner of Ann StreetAnn Street (Manhattan)
Ann Street is a 3-block long street located in the Financial District of the New York City borough of Manhattan just south of City Hall.- History :-Early history:...
. In 1848 the bank agreed to sell its building to its neighbor Barnum's American Museum
Barnum's American Museum
Barnum's American Museum was located at the corner of Broadway and Ann Street in New York City, USA, from 1841 to 1865. The museum was owned by famous showman P.T. Barnum and his partner and original owner, John Scudder. Prior to their partnership, the museum was known as Scudder's American...
(the building collapsed during Barnum's subsequent remodeling) and in 1850 the bank moved into its newly constructed headquarters at 270 Broadway. Chemical bought additional land adjacent its 270 Broadway building in 1879 and 1887 but its offices remained modest through the turn of the century.
In 1907 the bank constructed a new headquarters on the original and adjacent properties at 270 Broadway. In 1921, Chemical acquired a 13-Story building belonging to the Shoe & Leather Bank on Broadway, next door to and surrounded by its existing properties. Despite expanding its 1907 headquarters over the years, by the mid-1920s Chemical was in need of additional space to accommodate its growth and reflect its increasing profile.
In 1926, the bank made plans to move again, this time constructing a new six story location at 165 Broadway, on the corner of Broadway
Broadway (New York City)
Broadway is a prominent avenue in New York City, United States, which runs through the full length of the borough of Manhattan and continues northward through the Bronx borough before terminating in Westchester County, New York. It is the oldest north–south main thoroughfare in the city, dating to...
and Cortlandt Street, closer to the Financial District
Financial District, Manhattan
The Financial District of New York City is a neighborhood on the southernmost section of the borough of Manhattan which comprises the offices and headquarters of many of the city's major financial institutions, including the New York Stock Exchange and the Federal Reserve Bank of New York...
. Chemical moved into its new headquarters in 1928, after completion of the building, and the bank's headquarters would remain at that location for more than five decades.
Under Chairman Donald Platten, Chemical's headquarters were to move to 277 Park Avenue
277 Park Avenue
277 Park Avenue is an office building in New York City and is the current home of the JPMorgan Chase's Investment Banking Division. JP Morgan's takeover of Bear Stearns in 2008 will mean most employees will be moved to 383 Madison Avenue to reduce the leased real estate footprint in Midtown...
in 1979. The bank moved across Park Avenue in 1991 to occupy the former headquarters of Manufacturers Hanover Corporation
Manufacturers Hanover Corporation
Manufacturers Hanover Corporation was the bank holding company formed as parent of Manufacturers Hanover Trust Company, a large New York bank formed by a merger in 1961. After 1969, Manufacturers Hanover Trust became a subsidiary of Manufacturers Hanover Corporation. Charles J...
at 270 Park Avenue
270 Park Avenue
The JPMorgan Chase Tower or the Union Carbide Building is a skyscraper in Midtown Manhattan, designed by the office of Skidmore, Owings & Merrill. It was built in 1961, and served as the headquarters for Union Carbide until the company moved to Danbury, Connecticut. It is currently the world...
, which is still the headquarters of Chemical's successor, JPMorgan Chase. However, JPMorgan Chase returned to 277 Park Avenue
277 Park Avenue
277 Park Avenue is an office building in New York City and is the current home of the JPMorgan Chase's Investment Banking Division. JP Morgan's takeover of Bear Stearns in 2008 will mean most employees will be moved to 383 Madison Avenue to reduce the leased real estate footprint in Midtown...
in 2000, following the departure of its previous tenant, Donaldson Lufkin & Jenrette. In 2008, following JPMorgan's acquisition of Bear Stearns
Bear Stearns
The Bear Stearns Companies, Inc. based in New York City, was a global investment bank and securities trading and brokerage, until its sale to JPMorgan Chase in 2008 during the global financial crisis and recession...
, the bank relocated its investment banking
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
groups from Chemical's old headquarters to 383 Madison Avenue
383 Madison Avenue
383 Madison Avenue is an office building in New York City located on Madison Avenue between 46th and 47th Streets and owned by JP Morgan Chase. Designed by David Childs of Skidmore, Owings & Merrill LLP, it is 755 ft tall with 47 floors. It was completed in 2001 and opened in 2002, at...
.
Founding and early history
The company was founded in 1823 as the New York Chemical Manufacturing Company by Balthazar P. MelickBalthazar P. Melick
Balthazar P. Melick , an American merchant and banker, was the founder of Chemical Bank in 1823. Melick served as the first president of Chemical from 1823-1831.-Biography:...
together with the original directors of the company, John C. Morrison, Mark Spenser, Gerardus Post, James Jenkins, William A. Seely and William Stebbins. Additionally, Joseph Sampson
Joseph Sampson
Joseph Sampson was a 19th-century American businessman and merchant. He was among the founding shareholders of Chemical Bank in 1823.-Biography:...
, although not a director was among the largest of the original shareholders of the bank. The founders used the manufacturing company, which produced chemicals such as blue vitriol, alum
Alum
Alum is both a specific chemical compound and a class of chemical compounds. The specific compound is the hydrated potassium aluminium sulfate with the formula KAl2.12H2O. The wider class of compounds known as alums have the related empirical formula, AB2.12H2O.-Chemical properties:Alums are...
, nitric acid
Nitric acid
Nitric acid , also known as aqua fortis and spirit of nitre, is a highly corrosive and toxic strong acid.Colorless when pure, older samples tend to acquire a yellow cast due to the accumulation of oxides of nitrogen. If the solution contains more than 86% nitric acid, it is referred to as fuming...
, camphor
Camphor
Camphor is a waxy, white or transparent solid with a strong, aromatic odor. It is a terpenoid with the chemical formula C10H16O. It is found in wood of the camphor laurel , a large evergreen tree found in Asia and also of Dryobalanops aromatica, a giant of the Bornean forests...
and saltpeter
Potassium nitrate
Potassium nitrate is a chemical compound with the formula KNO3. It is an ionic salt of potassium ions K+ and nitrate ions NO3−.It occurs as a mineral niter and is a natural solid source of nitrogen. Its common names include saltpetre , from medieval Latin sal petræ: "stone salt" or possibly "Salt...
, as well as medicines, paints, and dye
Dye
A dye is a colored substance that has an affinity to the substrate to which it is being applied. The dye is generally applied in an aqueous solution, and requires a mordant to improve the fastness of the dye on the fiber....
s as a means to securing a bank charter
State bank
A state bank is generally a financial institution that is chartered by a state. It differs from a reserve bank in that it does not necessarily control monetary policy , but instead usually offers only retail and commercial services.A state bank that has been in operation for five years or less is...
from the New York State legislature. During the 1820s, prospective bankers found that they were more likely to be able to successfully secure a charter if the bank were part of a larger business. The following year, in April 1824, the company successfully amended its charter to allow Chemical to begin its banking practice. As a result, Chemical Bank was originally a division of the New York Chemical Manufacturing Company. Balthazar Melick was named the first president of the bank, which catered to merchants in New York City.
John Mason
John Mason (businessman)
John Mason was an early American businessperson, merchant and banker. Mason served as the second president of Chemical Bank from 1831 through 1839 and would later be referred to as "the father of the Chemical Bank". Mason was a founder of the New York and Harlem Railroad, one of the first...
became a shareholder of the bank in 1826 and would serve as Chemical's second president. Mason, who would later be referred to as "the father of the Chemical Bank," and was one of the richest merchants of his day in New York, succeeded Baltus Melick in 1831. Mason was responsible for establishing the highly conservative business culture of the young bank that would persist for nearly 90 years. For its first twenty-five years, the bank paid no dividends, nor did it pay interest on its customers deposits. Mason was also responsible for leading Chemical through the Panic of 1837
Panic of 1837
The Panic of 1837 was a financial crisis or market correction in the United States built on a speculative fever. The end of the Second Bank of the United States had produced a period of runaway inflation, but on May 10, 1837 in New York City, every bank began to accept payment only in specie ,...
. When a speculative bubble collapsed on May 10, 1837, banks suspended payment of gold and silver. Although twenty years later, Chemical would stand alone and continue to make payments in specie
Coin
A coin is a piece of hard material that is standardized in weight, is produced in large quantities in order to facilitate trade, and primarily can be used as a legal tender token for commerce in the designated country, region, or territory....
, in this crisis the bank followed others in suspending payments. Chemical was one of the earliest to resume payments in specie.
Mason died on September 26, 1839, but his legacy of conservatism was taken on by his successors. Isaac Jones and later his cousin John Quentin Jones would lead Chemical, both serving as president, across the next forty years through 1878. Both Isaac and John Jones had close connections to John Mason
John Mason (businessman)
John Mason was an early American businessperson, merchant and banker. Mason served as the second president of Chemical Bank from 1831 through 1839 and would later be referred to as "the father of the Chemical Bank". Mason was a founder of the New York and Harlem Railroad, one of the first...
, particularly Isaac who married one of John Mason
John Mason (businessman)
John Mason was an early American businessperson, merchant and banker. Mason served as the second president of Chemical Bank from 1831 through 1839 and would later be referred to as "the father of the Chemical Bank". Mason was a founder of the New York and Harlem Railroad, one of the first...
's three daughters. The Mason and Jones families would maintain effective control of Chemical for much of its first five decades. John Q. Jones was succeeded in 1878 by George G. Williams, who had joined the bank in 1842 and served as cashier of the bank from 1855 onward. In that position, Williams was also inculcated in Chemical's conservative style of banking. Williams would serve as president from 1878 through 1903.
In 1844, when New York Chemical Manufacturing Company's original charter expired, the chemical company was liquidated and was reincorporated as a bank only, becoming the Chemical Bank of New York in 1844. Among the bank's first directors under its new charter were Cornelius Roosevelt
Cornelius Roosevelt
Cornelius Van Schaack Roosevelt was an American businessman from New York City and a member of the Roosevelt family.-Biography:...
, John D. Wolfe, Isaac Platt and Bradish Johnson, as well as the bank's president John Q. Jones. The company sold all remaining inventories from the chemical division as well as real estate holdings by 1851.
Two years later, in 1853, Chemical became a charter member of the New York Clearing House
New York Clearing House
The New York Clearing House Association, the nation’s first and largest bank clearing house, was created in 1853, and has played a variety of important roles in supporting the development of the banking system in America’s financial capital. Initially, it was created to simplify the chaotic...
, the first and largest bank clearing house in the U.S. Two Chemical presidents would also serve as head of the clearing house, with John Q. Jones serving from 1865–1871 and George G. Williams serving in 1886 and from 1893–1894.
During the Panic of 1857
Panic of 1857
The Panic of 1857 was a financial panic in the United States caused by the declining international economy and over-expansion of the domestic economy. Indeed, because of the interconnectedness of the world economy by the time of the 1850s, the financial crisis which began in the autumn of 1857 was...
, Chemical Bank earned the nickname "Old Bullion" by taking a stand that it would continue to redeem its bank notes in specie
Coin
A coin is a piece of hard material that is standardized in weight, is produced in large quantities in order to facilitate trade, and primarily can be used as a legal tender token for commerce in the designated country, region, or territory....
throughout the crisis. The panic, which had hit banks and caused a number of failures, led banks across the country to suspend specie payments and turn to issuing paper promissory notes. Chemical's decision was highly unpopular among its fellow banks and led to the bank's temporary suspension from the New York Clearing House
New York Clearing House
The New York Clearing House Association, the nation’s first and largest bank clearing house, was created in 1853, and has played a variety of important roles in supporting the development of the banking system in America’s financial capital. Initially, it was created to simplify the chaotic...
, of which Chemical was a charter member. While hundreds of banks closed, including 18 banks in New York in a single day, Chemical developed a reputation for stability. This reputation proved extremely important in Chemical's growth during subsequent recessions during the 1860s. Chemical frequently used the refrain "Good as gold then, good as gold today" in advertisements from the 1860s well into the 20th century.
Chemical received its national charter as the Chemical National Bank of New York in 1865, at the urging of the secretary of the treasury. This allowed Chemical to issue government-backed national bank notes, the forerunner to paper money. By the early 1870s, Chemical had accumulated deposits in excess of $6 million.
A contemporary perspective of Chemical from 1893 described the bank as follows:
1900–1946
By the first decade of the 20th century, Chemical had one of the strongest reputations in banking but as a business was in decline, losing accounts each year. Unlike many of its peers, Chemical had been reluctant to expand into securities and other businesses and had not paid interest on bank accounts. Both practices, considered to be highly conservative, had allowed Chemical to develop a large capital reserve but were not attracting customers. William H. PorterWilliam H. Porter
William Henry Porter was a prominent banker in New York City. He was born at Middlebury, Vermont, and died in New York City on November 30, 1926.-Banking Career:...
, a prominent banker of the era, was named president of the bank in 1903 after the death of the previous president George G. Williams. Porter would leave Chemical seven years later to become a partner at J.P. Morgan & Co.
J.P. Morgan & Co.
J.P. Morgan & Co. was a commercial and investment banking institution based in the United States founded by J. Pierpont Morgan and commonly known as the House of Morgan or simply Morgan. Today, J.P...
in 1910 and was succeeded by Joseph B. Martindale, who was named president in 1911.
In 1917, Chemical named a new president of the bank, Herbert Twitchell, after the death of Joseph B. Martindale. It was uncovered, just months after Martindale's death, that the former Chemical president had stolen as much as $300,000 from the account of Ellen D. Hunt, a niece of Wilson G. Hunt.
Twitchell initiated a major turnaround of Chemical, setting up a trust business and reversing Chemical's policy of not paying interest on cash accounts. These steps along with other initiatives, resulted in an increase in deposits from $35 million to $81 million by 1920. In 1920, Twitchell was succeeded by Percy H. Johnston and remained with the bank as chairman of the board. Johnston would hold the presidency of the bank through 1946 at which time the bank had grown to become the seventh largest in the U.S.
In 1920, Chemical completed its first major acquisition, merging with Citizens National Bank. The acquisition of Citizens National, a small New York commercial bank, increased Chemical's assets to more than $200 million with more than $140 million of deposits. In 1923 Chemical established its first branch and by the end of the 1920s had opened a dozen branches in Manhattan and Brooklyn as well as a branch in London, its first international presence.
In 1929, Chemical reincorporated as a state bank in New York as Chemical Bank & Trust Company and merged with the United States Mortgage & Trust Company, headquartered on the Madison Avenue and 74th Street. During the Depression-era of the 1930s, Chemical's deposits grew by more than 40% and in 1941, the bank reached $1 billion of assets. During this period, Chemical also established Chemical National Company a securities underwriting business.
1947–1979
In 1947, after the retirement of Percy Johnston, Harold H. Helm was named the new president of Chemical and would serve first as president and later as chairman of the bank for the next 18 years until his retirement in 1965. Under Helm, Chemical completed a series of large mergers in the late 1940s and early 1950s that again made the bank among the largest in the U.S. In 1947, Chemical merged with Continental Bank and Trust Company. Then in 1954, Chemical would merge with the Corn Exchange BankCorn Exchange Bank
The Corn Exchange Bank was founded in 1853 in New York, but had branches in other states, including Pennsylvania, Wisconsin, and Nebraska. It was a retail bank that acquired many community banks. In 1929 it was renamed the Corn Exchange Bank and Trust Company. In 1954 it merged with Chemical Bank...
and only five years later merge again with the New York Trust Company.
Chemical completed its largest acquisition to that point, in 1954, merging with the Corn Exchange Bank
Corn Exchange Bank
The Corn Exchange Bank was founded in 1853 in New York, but had branches in other states, including Pennsylvania, Wisconsin, and Nebraska. It was a retail bank that acquired many community banks. In 1929 it was renamed the Corn Exchange Bank and Trust Company. In 1954 it merged with Chemical Bank...
to become the Chemical Corn Exchange Bank. Founded in 1853, the Corn Exchange Bank was based in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, but had built a network of branches in other states through the acquisition of community banks. The merger with the Corn Exchange Bank added 98 additional branches to Chemical's system largely in the New York City and $774 million in deposits.
In 1959, the bank, now known as Chemical Corn Exchange Bank, merged with New York Trust Company, effectively doubling the size of the company. New York Trust Company, which had a large trust and wholesale-banking business, specialized in servicing large industrial accounts. At the time of the merger, Chemical Corn was the fourth largest bank in New York and New York Trust was the ninth largest bank and the merger created the third largest bank in New York, and the fourth largest in the U.S. with $3.8 billion of assets. Following the merger, the bank dropped the usage of the "corn exchange" from the corporate name to become the Chemical Bank New York Trust Company.
In 1968, Chemical reorganized itself as a bank holding company which allowed for more rapid expansion. Throughout the early 1960s Chemical had begun to expand into New York's suburbs, opening branches on Long Island
Long Island
Long Island is an island located in the southeast part of the U.S. state of New York, just east of Manhattan. Stretching northeast into the Atlantic Ocean, Long Island contains four counties, two of which are boroughs of New York City , and two of which are mainly suburban...
and in Westchester County. However by the late 1960s and early 1970s, Chemical was focused on building its international business. In these years, Chemical opened new offices in the Frankfurt, Germany (1969), Zurich, Switzerland (1971), Brussels, Belgium (1971), Paris, France (1971) and Tokyo, Japan (1972).
In 1975, Chemical acquired Security National Bank, which had a branch network on Long Island
Long Island
Long Island is an island located in the southeast part of the U.S. state of New York, just east of Manhattan. Stretching northeast into the Atlantic Ocean, Long Island contains four counties, two of which are boroughs of New York City , and two of which are mainly suburban...
.
1980s
Chemical continued pursuing acquisitions, throughout the 1980s notably its acquisitions of Texas Commerce BankTexas Commerce Bank
The Texas Commerce Bank was a Texas-based bank acquired by Chemical Banking Corporation of New York in May 1987...
(1986) and Horizon Bancorp (1986) as well as its attempted takeover of Florida National Bank
Florida National Bank
Florida National Bank , founded in 1905, grew to became the second largest commercial bank in Florida. Florida National Group was acquired in 1990 by First Union Corporation, which was renamed Wachovia in 2001.-Early years:...
(1982).
Chemical and Florida National Bank
Florida National Bank
Florida National Bank , founded in 1905, grew to became the second largest commercial bank in Florida. Florida National Group was acquired in 1990 by First Union Corporation, which was renamed Wachovia in 2001.-Early years:...
agreed, in 1982, to enter into a merger, after laws preventing interstate banking were lifted, giving Chemical an option to acquire the business. In February, 1982, Southeast Banking Corporation
Southeast Banking Corporation
Southeast Banking Corporation was a holding company in Miami, Florida, United States, with two subsidiary banks, Southeast Bank N.A. in Miami and Southeast Bank of West Florida in Pensacola...
(SBC), which had been rebuffed in its attempted to acquire Florida National sued to obtain an injunction against the Chemical merger. In early 1983, Southeast Banking Corporation dropped its takeover attempt and agreed to exchange their Florida National shares for 24 FNB branch offices and other consideration. Following the deal with SBC, Florida National was cleared to merge with Chemical, however interstate banking acquisitions were still prohibited by Federal law and required state legislative approval. With the 1990 deadline running out for its option to buy Florida National and no sign of state legislative approval, Chemical Bank sold their 4.9% interest to First Union Corporation
First Union Corporation
First Union Corporation was a banking company providing commercial and retail banking services in eleven states in the eastern U.S. First Union also provided various other financial services, including mortgage banking, credit card, investment banking , investment advisory, home equity lending,...
for $115 million.
Texas Commerce Bank
The Texas Commerce Bank was a Texas-based bank acquired by Chemical Banking Corporation of New York in May 1987...
. The $1.1 billion transaction represented the largest interstate banking merger in U.S. history to that time. Texas Commerce, which was officially acquired in May 1987, was one of the largest bank holding companies in the Southwestern U.S., with a strong presence in corporate banking for small and medium sized businesses. Chemical did not seek Federal Deposit Insurance Corporation
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...
backing for its acquisition of Texas Commerce although other large Texas banks, First RepublicBank Corporation
First RepublicBank Corporation
This article is about the defunct bank based in Dallas, Texas. For the bank based in San Francisco, California, see First Republic Bank.First Republic Bank Corporation was a bank that failed in 1988, during the savings and loan crisis. The company first opened as the Guaranty Bank and Trust Company...
(Acquired by NationsBank
NationsBank
NationsBank was one of the largest banking corporations in the United States, based in Charlotte, North Carolina. In 1998, it acquired BankAmerica to become Bank of America.-Corporate history:...
) and MCorp Bank (acquired by Bank One), received over $5 billion of support. Ultimately Chemical contributed $300 million to shore Texas Commerce as it continued to suffer losses.
Also in 1986, Chemical agreed to a merger with New Jersey-based Horizon Bancorp, although the merger was not completed until 1989, due again to interstate banking rules.
The bank's holding company, which had been the Chemical New York Corporation was renamed the Chemical Banking Corporation in 1988 following its series of out of state mergers and acquisitions, including Texas Commerce Bank
Texas Commerce Bank
The Texas Commerce Bank was a Texas-based bank acquired by Chemical Banking Corporation of New York in May 1987...
and Horizon Bancorp.
It was during this period, in the 1980s and early 1990s, that Chemical emerged as one of the leaders in the financing of leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
transactions. By the late 1980s, Chemical developed its reputation for financing buyouts, building a syndicated leveraged finance business and related advisory businesses under the auspices of pioneering investment banker, Jimmy Lee
James B. Lee, Jr.
James B. Lee Jr. , commonly known as Jimmy, is an investment banker, notable for his role in the development of the leveraged finance markets in the U.S. in the 1980s. Lee is widely credited as the architect of the modern-day syndicated loan market.Lee currently serves as vice chairman of JPMorgan...
. It was not until 1993 that Chemical would permission to underwrite corporate bonds, however within a few years, Chemical (and later Chase) became a major underwriter of below-investment-grade debt under Lee. Additionally, in 1984, Chemical launched Chemical Venture Partners to invest in private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
transactions alongside various financial sponsor
Financial sponsor
A financial sponsor is a term commonly used to refer to private equity investment firms, particularly those private equity firms that engage in leveraged buyout or LBO transactions....
s.
1990s
Manufacturers Hanover Corporation
Manufacturers Hanover Corporation was the bank holding company formed as parent of Manufacturers Hanover Trust Company, a large New York bank formed by a merger in 1961. After 1969, Manufacturers Hanover Trust became a subsidiary of Manufacturers Hanover Corporation. Charles J...
in a $135 billion merger transaction. At the time of the merger, Chemical and Manufacturers Hanover were the sixth and ninth largest banks, respectively, by assets. The transaction, when it closed at the end of 1991, made the combined bank, which retained the Chemical name, the second largest bank in the U.S., behind Citicorp both in terms of assets and customers (approximately 1.2 million household accounts in 1991). Chemical adopted Manufacturers Hanover's logo design and moved into its headquarters at 270 Park Avenue
270 Park Avenue
The JPMorgan Chase Tower or the Union Carbide Building is a skyscraper in Midtown Manhattan, designed by the office of Skidmore, Owings & Merrill. It was built in 1961, and served as the headquarters for Union Carbide until the company moved to Danbury, Connecticut. It is currently the world...
in New York. In corporate banking, Manufacturers Hanover was better established with larger, blue-chip companies, whereas Chemical had been stronger with small- and medium-sized businesses.
Nationally, the combined Chemical bank became one of the largest lenders to U.S. companies and was the arguably the leader in loan syndications globally. Additionally, Chemical took a leading role providing foreign exchange, interest rate and currency swaps, corporate finance services, cash management, corporate and institutional trust, trade services and funds transfer. Chemical operated one of the nation's largest bank credit card franchises and was a major originator and servicer of home mortgages.
In 1996, Chemical acquired The Chase Manhattan Corporation in a merger valued at $10 billion to create the largest financial institution in the United States. Although Chemical was the acquirer, the bank adopted the Chase
Chase (bank)
JPMorgan Chase Bank, N.A., doing business as Chase, is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. The bank was known as Chase Manhattan Bank until it merged with J.P. Morgan & Co. in 2000...
brand, which was considered to be better known, particularly internationally. Chase, which had been the largest bank in the U.S. had fallen to sixth, while Chemical was the third largest bank at the time of the merger. The merger resulted in the reduction of more than 12,000 jobs between the two banks and merger related expenses of approximately $1.9 billion.
The bank continued to operate under the Chase brand until its acquisition of J.P. Morgan & Co.
J.P. Morgan & Co.
J.P. Morgan & Co. was a commercial and investment banking institution based in the United States founded by J. Pierpont Morgan and commonly known as the House of Morgan or simply Morgan. Today, J.P...
in December 2000 to form JPMorgan Chase & Co.
JPMorgan Chase & Co.
JPMorgan Chase & Co. is an American multinational banking corporation of securities, investments and retail. It is the largest bank in the United States by assets and market capitalization.It is a major provider of financial services, with assets of $2 trillion and according to Forbes magazine is...
Throughout all of these acquisitions, Chemical's original management team, led by Walter V. Shipley
Walter V. Shipley
Walter V. Shipley was the former Chairman and Chief Executive Officer of Chase Manhattan Bank and its predecessor Chemical Bank. Shipley was named chief executive of Chemical in 1981 and held the position through 1999 and remained at the bank as chairman through January 2000, just prior to the...
remained in charge of the bank. When the combined bank purchased J.P. Morgan & Co., William B. Harrison, Jr.
William B. Harrison, Jr.
William B. Harrison, Jr., born August 12, 1943 in Rocky Mount, North Carolina, is the former CEO and Chairman of JPMorgan Chase. He attended high school at Virginia Episcopal School, where he was a basketball star. He attended the University of North Carolina at Chapel Hill, where he was admitted...
, who had been a longtime Chemical executive, was named CEO of the combined firm. Additionally, many of Chemical's businesses remaining intact through the various mergers. Chemical's private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
group for example, was renamed multiple times, ultimately becoming JP Morgan Partners before completing a spin-out from the bank, as CCMP Capital
CCMP Capital
CCMP Capital is a private equity investment firm that focuses on leveraged buyout and growth capital transactions. Formerly known as JP Morgan Partners, the investment professionals of JP Morgan Partners separated from JPMorgan Chase on July 31, 2006. CCMP has invested approximately $12 billion...
, after the bank's 2004 merger with Bank One.
Acquisition history
The following is an illustration of the company's major mergers and acquisitions and historical predecessors (this is not a comprehensive list):Electronic banking
Chemical was among the pioneers of electronic online bankingOnline banking
Online banking allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society.-Features:...
. On September 2, 1969, Chemical installed the first automated teller machine
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...
(ATM) at its branch in Rockville Centre, New York
Rockville Centre, New York
Rockville Centre is a village located in Nassau County, New York, in the United States. As of the 2010 census, the village had a total population of 24,023. The town is made up of middle to upper middle class residents, most of the wealthier residents residing on the north side of town near the...
. The first ATMs were designed to dispense a fixed amount of cash when a user inserted a specially coded card. A Chemical Bank advertisement boasted "On Sept. 2 our bank will open at 9:00 and never close again." Chemicals' ATM, initially known as a Docuteller was designed by Donald Wetzel
Donald Wetzel
Donald C. Wetzel is an American engineer, known for holding the USA patent to the automatic teller machine.Born in New Orleans, Louisiana he graduated from Jesuit High School and got a...
and his company Docutel. Chemical executives were initially hesitant about the electronic banking transition given the high cost of the early machines. Additionally, executives were concerned that customers would resist having machines handling their money.
In 1982, Chemical initiated the first personal computer based banking system when it launched a pilot electronic banking program called Pronto. Chemical had spent $20 million to develop the software for Pronto. The system, which worked with the ATARI
Atari
Atari is a corporate and brand name owned by several entities since its inception in 1972. It is currently owned by Atari Interactive, a wholly owned subsidiary of the French publisher Atari, SA . The original Atari, Inc. was founded in 1972 by Nolan Bushnell and Ted Dabney. It was a pioneer in...
console, began in New York and served 200 Chemical Bank customers. Pronto was an extension of other electronic banking services offered by Chemical that included a corporate cash-management system and its growing ATM network and was one of the largest early foray by a bank into home computer based banking. However, a year after launching Pronto only 21,000 of Chemical's 1.15 million customers were using the system, in large part due to the high monthly subscription costs that Chemical charged customers to use it. By 1985, it was clear that Pronto, which was heavily promoted by Chemical was growing much slower than anticipated.
In 1985, Chemical and BankAmerica, another pioneer in electronic banking, entered into a joint venture with AT&T
AT&T
AT&T Inc. is an American multinational telecommunications corporation headquartered in Whitacre Tower, Dallas, Texas, United States. It is the largest provider of mobile telephony and fixed telephony in the United States, and is also a provider of broadband and subscription television services...
and Time Inc.
Time Inc.
Time Inc. is a subsidiary of the media conglomerate Time Warner, the company formed by the 1990 merger of the original Time Inc. and Warner Communications. It publishes 130 magazines, most notably its namesake, Time...
, known as Covidea, to market banking and discount stock-brokerage services to computer-equipped households. By combining resources and sharing costs, the four firms hope to reduce the risk of large and protracted losses. Eventually Chemical discontinued its efforts in 1989 at a loss of nearly $30 million.
Executives and directors
- William B. Harrison, Jr.William B. Harrison, Jr.William B. Harrison, Jr., born August 12, 1943 in Rocky Mount, North Carolina, is the former CEO and Chairman of JPMorgan Chase. He attended high school at Virginia Episcopal School, where he was a basketball star. He attended the University of North Carolina at Chapel Hill, where he was admitted...
, later CEO of JPMorgan Chase - James B. Lee, Jr.James B. Lee, Jr.James B. Lee Jr. , commonly known as Jimmy, is an investment banker, notable for his role in the development of the leveraged finance markets in the U.S. in the 1980s. Lee is widely credited as the architect of the modern-day syndicated loan market.Lee currently serves as vice chairman of JPMorgan...
, investment banker and senior executive at JPMorgan Chase, notable for his role in the development of the leveraged finance markets in the U.S. - Robert I. LippRobert I. LippRobert I. Lipp is a senior partner at Brysam Global Partners, a private equity firm. He is a former member of the board of JP Morgan Chase, and a director for Accenture and The Travelers Companies Inc....
, partner of Brysam Global PartnersBrysam Global PartnersBrysam Global Partners is a private equity firm that specializes in consumer financial services in emerging markets. It was founded in January 2007 by Marjorie Magner and Robert Willumstad....
, a private equityPrivate equityPrivate equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
firm, and former member of the board of JPMorgan Chase - John McGillicuddyJohn McGillicuddyJohn Francis McGillicuddy was an American banking industry executive who oversaw the merger between Manufacturers Hanover Trust and Chemical Bank in the early 1990s....
, former chairman and CEO of Manufacturers Hanover - John MasonJohn Mason (businessman)John Mason was an early American businessperson, merchant and banker. Mason served as the second president of Chemical Bank from 1831 through 1839 and would later be referred to as "the father of the Chemical Bank". Mason was a founder of the New York and Harlem Railroad, one of the first...
, early shareholder and second president of Chemical Bank - Balthazar P. MelickBalthazar P. MelickBalthazar P. Melick , an American merchant and banker, was the founder of Chemical Bank in 1823. Melick served as the first president of Chemical from 1823-1831.-Biography:...
, founder and first president of Chemical Bank - John L. Notter, international financier and developer, former director
- Cornelius RooseveltCornelius RooseveltCornelius Van Schaack Roosevelt was an American businessman from New York City and a member of the Roosevelt family.-Biography:...
, original director of Chemical Bank of New York when it was rechartered in 1844 - Emlen RooseveltEmlen RooseveltWilliam Emlen Roosevelt was a prominent New York City banker who held a wide range of positions in numerous organizations and was a cousin of United States President Theodore Roosevelt. He was president of Roosevelt & Son, the banking firm founded by his father James Alfred Roosevelt...
, cousin of Theodore Roosevelt and president of Roosevelt & SonRoosevelt & SonRoosevelt & Son was an investment banking firm connected with the Roosevelt Family for nearly two centuries. The firm was among the oldest banking houses on Wall Street.Many of the male members of the Roosevelt family worked for the firm in some capacity.... - James A. RooseveltJames A. RooseveltJames Alfred Roosevelt was an American merchant, a member of the Roosevelt family, and an uncle of United States President Theodore Roosevelt. He became a member of his father Cornelius Roosevelt's mercantile firm at the age of twenty, and eventually succeeded him as its head...
, uncle of Theodore Roosevelt and founder of Roosevelt & SonRoosevelt & SonRoosevelt & Son was an investment banking firm connected with the Roosevelt Family for nearly two centuries. The firm was among the oldest banking houses on Wall Street.Many of the male members of the Roosevelt family worked for the firm in some capacity.... - Walter V. ShipleyWalter V. ShipleyWalter V. Shipley was the former Chairman and Chief Executive Officer of Chase Manhattan Bank and its predecessor Chemical Bank. Shipley was named chief executive of Chemical in 1981 and held the position through 1999 and remained at the bank as chairman through January 2000, just prior to the...
, former Chairman and CEO of Chemical and later Chase Manhattan BankChase Manhattan BankJPMorgan Chase Bank, N.A., doing business as Chase, is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. The bank was known as Chase Manhattan Bank until it merged with J.P. Morgan & Co. in 2000...
and Chairman of JPMorgan Chase
Other former employees
- Henry B. R. BrownHenry B. R. BrownHenry Bedinger Rust "Harry" Brown was an American financial consultant known for inventing the world's first money market fund, The Reserve Fund, with Bruce R. Bent in 1970.-Early career:...
, the originator of the world's first money market fund - Granger K. CostikyanGranger K. CostikyanGranger Kent Costikyan was an American banker. His father who was from Marsovan, Turkey had immigrated from Constantinople in 1884, and organised the successful import firm, Costikyan Freres which still exists and specializes in oriental carpets. Granger was educated at Yale and graduated in 1929...
, founder of Costikyan Freres - Alan H. FishmanAlan H. FishmanAlan H. Fishman was the last CEO of Washington Mutual for 17 days before its banking assets were seized by federal regulators on September 25, 2008 in the largest bank failure in American history...
, the last CEO of Washington MutualWashington MutualWashington Mutual, Inc. , abbreviated to WaMu, was a savings bank holding company and the former owner of Washington Mutual Bank, which was the United States' largest savings and loan association until its collapse in 2008....
before the bank was seized in 2008 - Ford M. FrakerFord M. FrakerFord M. Fraker, of Massachusetts, is a former U.S. Ambassador to Saudi Arabia.-Career highlights:Prior to his nomination, Fraker was serving as chairman of the Trinity Group Limited, a private investment banking firm in the United Kingdom, and as consultant for Intercontinental Real Estate...
, former ambassador to Saudi ArabiaSaudi ArabiaThe Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World... - Abraham GeorgeAbraham GeorgeDr. Abraham M. George is a Indian-American businessman, academic, and philanthropist. He is the founder of The George Foundation , a non-profit organization based in Bangalore, India dedicated to the welfare and empowerment of economically and socially disadvantaged populations in India...
, businessman, academic, and philanthropist and founder of The George FoundationThe George FoundationThe George Foundation is a non-governmental organization established in 1995 with head office in Bangalore, India. Its founder is Dr. Abraham M... - Anne Harms, vice president of private banking division and mother of Elizabeth and Andrew ShueAndrew ShueAndrew Eppley Shue is an American actor, known for his role as Billy Campbell on the television series Melrose Place . He is currently on the Board of Directors for Do Something and is the co-founder of the social networking website CafeMom.-Early life:Shue was born in Wilmington, Delaware...
- Espen Gaarder Haug, author, quantitative trader and arbitrageur specializing in options and other derivatives
- Kathryn V. MarinelloKathryn V. MarinelloKathryn V. Marinello is the CEO, a Director of the Company and Chairman of the Board for Stream Global Services, a global outsourcing solution provider, providing BPO services for Fortune 1000 clients, with 32 service centers in 18 countries. Marinello stepped down from her role of President and...
, former President and CEO of Ceridian Corporation - Darla MooreDarla MooreDarla Dee Moore is a partner of the private investment firm Rainwater, Inc, and is married to Richard Rainwater, who founded the firm....
, partner of Rainwater, Inc.Richard Rainwater-Early life:The son of a wholesale grocer, he grew up in Fort Worth, Texas. He graduated from the University of Texas with a degree in mathematics, where he was a member of the Tau chapter of the Kappa Sigma fraternity. He was recognized by the national organization in 1996 as Kappa Sigma Man of...
and wife of Richard RainwaterRichard Rainwater-Early life:The son of a wholesale grocer, he grew up in Fort Worth, Texas. He graduated from the University of Texas with a degree in mathematics, where he was a member of the Tau chapter of the Kappa Sigma fraternity. He was recognized by the national organization in 1996 as Kappa Sigma Man of... - Nancy NaplesNancy NaplesNancy A. Naples, a member of the Board of Directors of Amtrak, is the former Commissioner of Motor Vehicles in New York. Naples was appointed State Motor Vehicles Commissioner by then-Gov. George Pataki in January 2006 following a 12-year political career in Western New York...
, director of AmtrakAmtrakThe National Railroad Passenger Corporation, doing business as Amtrak , is a government-owned corporation that was organized on May 1, 1971, to provide intercity passenger train service in the United States. "Amtrak" is a portmanteau of the words "America" and "track". It is headquartered at Union... - Peggy PostPeggy PostPeggy Post is an American author and consultant on etiquette. She is Emily Post's great-granddaughter-in-law and continues her work as director and spokesperson for The Emily Post Institute in Vermont.- Background :...
, an American author and consultant on etiquette - Pat ToomeyPat ToomeyPatrick Joseph "Pat" Toomey, Sr. is the junior United States Senator for Pennsylvania and a member of the Republican Party. Previously, Toomey served as a U.S. Representative for three terms, but did not seek a fourth in compliance with a pledge he had made while running for office in 1998...
, United States Senator from Pennsylvania - Kathleen WaldronKathleen WaldronDr. Kathleen M. Waldron is an American author, financial executive and educator. She is currently the seventh president of William Paterson University in Wayne, New Jersey. From 2004 to 2009, she served as the president of Baruch College of the City University of New York, succeeding Edward Regan,...
, an American author, financial executive and educator