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Chase takes control
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September 14, 2000: 3:36 p.m. ET
Bank picks half Chase, half Morgan staff to run investment banking unit
By Staff Writer Luisa Beltran
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NEW YORK (CNNfn) - Chase Manhattan Corp. sent a clear signal Thursday that it is taking control of its pending union with J.P. Morgan, choosing Chase executives to lead half of the positions of the firm's investment banking business.
In a memo sent to Chase employees, the global bank reiterated Wednesday that the merger is primarily about growth. Chase picked a nearly equal split among personnel from both companies to lead the investment bank, the newly christened J.P. Morgan Investment. However, Chase executives still outweigh J.P. Morgan on the firm's executive committee, which is comprised of eight from Chase and five from J.P. Morgan.
Walter Gubert, from J.P. Morgan, will serve as chairman of the investment bank while Chase named Clayton Rose, the former head of investment banking at J.P. Morgan, to be chief operating officer. Steve Black, a Chase executive, will serve as head of equities while Don Wilson, of Chase, and Bill Winters, of J.P. Morgan, both will lead the investment bank's fixed income practice.
 Jacques Aigrain and Ned Kelly, of J.P. Morgan, and Dan Case and Mark Davis, of Chase, will serve as business leaders of the investment bank's client management business. Doug Braunstein, of Chase, and Joe Walker, of J.P. Morgan, both will head the firm's mergers and acquisition practice. Don Wilson, of Chase, and Bill Winters, of Morgan, will lead fixed income.
Analysts said the appointments create tension because J.P. Morgan has a stronger investment banking business but many of the executives chosen are from Chase.
"You have a guy running equities who is from Chase, but one of the reasons Chase bought Morgan was for equities," analyst George Bicher, of DB Alex. Brown said of the Steve Black appointment.
"When I look at the list, Chase is running the company," Bicher added. "Chase paid a lot for J.P. Morgan and it's theirs to run."
The appointments raise concern that Chase will cause the departure of many significant people, analysts said. They pointed to the absence of James Lee, who helped build the investment banking practice at Chase.
"Now he is doing client stuff," Bicher said. "Looks like he's been pushed aside."
10,000 jobs at stake
On Wednesday, Chase Manhattan Corp. (CMB: Research, Estimates) announced that it was acquiring J.P. Morgan & Co. in a $33 billion stock deal. The combined company, to be called J.P. Morgan Chase, will have about 100,000 people globally and about 18,000 employees based in New York City.
Published reports have indicated that the merger could cause J.P. Morgan Chase to shed as many as 10,000 people. Both Chase and J.P. Morgan (JPM: Research, Estimates) declined to comment.
 Sources close to the situation indicated that the combined company would have several overlaps, particularly in investment banking, high-yield, foreign currencies, fixed income and credit businesses.
"Some of these numbers are way out of whack," a source said.
In 1995, the merger of Chase and Chemical Bank caused the combined company to let go of 10,000 employees. However, insiders said the two companies — both commercial banks -- had more duplicate businesses than the current Chase-J.P. Morgan combination.
"This is a quasi-commercial bank merging with an investment bank. There are a lot of dissimilarities in a lot of areas," the source said.
Analyst Steve Eisman, of CIBC World Markets, expects the merger to produce a high number of layoffs.
"Don't know if it will be on par with Chase-Chemical bank, but it will be a big number," he said.
Chase Manhattan shares lost 44 cents, or 0.86%, to $50.25 while J.P. Morgan's lost $1.88 to $179.62 in afternoon trading Thursday. 
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