TCS Daily

Meet the Un-Enron: Banking's Next Top Gun

By Fraser Seitel - January 27, 2004 12:00 AM

In the 1970s, three commercial banks dominated the world. Chase Manhattan. Bank of America. Citibank. Each sat atop more than $100 billion in assets and deposits.

Just below the Big 3 in rank were a host of banking behemoths, headquartered in New York, Chicago and California. These money center banks -- with names like Chemical, Manufacturers Hanover, Morgan Guaranty, Continental, First National Bank of Chicago, Crocker, Security Pacific and 10 or 15 others -- dominated the U.S. commercial banking landscape. Each competed aggressively for corporate business, was dominant in its own statewide retail market (to which banks were restricted by law), and were generally led by strong, outspoken leaders.

The "strongest" of these banking leaders were the men who led the Big 3, singular CEOs, not only household names in the world of finance but in the world at large.

  • Chase was run by David Rockefeller, scion of American nobility, a global business statesman, as comfortable with presidents and kings as he was with bankers and borrowers.

  • Tom Clausen ran the Bank of America. A tough talking, no nonsense, roll up your sleeves banker, who later became president of the World Bank.

  • Citibank was ruled by Walter Wriston, a financial services innovator, who combined great banking acumen with international clout.

In the subsequent three decades, the banking terrain -- like most other terrains -- has changed dramatically.

Mega-mergers have vanquished the venerable names. Chemical merged with Manufacturers Hanover and then with Chase and later with Morgan. Bank of America was subsumed by upstart Nation's Bank, itself the successor to the genteel Citizens and Southern Bank and various others. Citibank shunned banking partners and instead united with the mammoth Traveler's Insurance Company.

The end result of all this merging is that while three decades ago the Big 3 commercial banks led a robust banking industry, today those same Big 3 are the banking industry.

Citigroup boasts assets in excess of $1.19 trillion; JP Morgan Chase, $1.1 trillion; and Bank of America, just under $1 trillion. Their nearest U.S. banking rival is Wells Fargo, weighing in at a "puny" $370 billion in assets.

One casualty of this merger merry-go-round was the loss of CEO leadership in the banking industry, despite the size and power of the institutions created. In the years after Rockefeller-Clausen-Wriston, precious few bank CEOs have ventured beyond the cozy confines of their corporate quarters to emerge as national or even industry leaders. They are largely unknowns.

Indeed, while many may recognize the names of Microsoft's Bill Gates or Steve Ballmer, Dell's Michael Dell, Disney's Michael Eisner, Hewlett Packard's Carly Fiorina, or even Time Warner's Dick Parsons or AIG's Maurice Greenberg, few Americans can name even one single banker.

But that is about to change.

As a result of this month's most recent eye-popping merger of JPMorgan Chase with Chicago's Bank One, the U.S. banking industry once again has a leader in the Rockefeller-Clausen-Wriston mold.

Jamie Dimon is a 47-year-old, smart, loud, demanding, and fearless Queens, New York native, who in less than two years will be known to all as the world's most dominant banker.

Fired by his mentor of 16 years, Sandy Weil at Citigroup, the Wall Street-hardened/Harvard Business School-educated Dimon joined Chicago's troubled Bank One in early 2000, with the company suffocating from out-of-control expenses and looming loan losses.

Since that time, Dimon has, as he himself put it, "chain sawed" the Midwest bank's expenses by a whopping $1.8 billion, reduced the Bank One workforce by thousands of people, deftly navigated the institution through large nonperforming loans, and recruited a handful of loyal and talented lieutenants to help him succeed. From a loss of $511 million in 2000, annual earnings at Bank One now total $3 billion.

Dimon, in other words, has turned the bank around, presided over a 34% increase in the stock price, and, as a consequence, become the banking darling of Wall Street.

Moreover, and not inconsequential in the days of Enron and Worldcom and Tyco, Dimon achieved his dramatic turnaround by imposing impeccable ethical standards. According to anyone with whom he has worked, Dimon is intolerant -- to the point of going instantly ballistic -- of any shenanigans in structuring deals, honoring commitments, or producing balance sheets and income statements.

"Jamie Dimon," said Arthur Levitt, who as SEC chairman preceded Elliot Spitzer in his zeal to root out financial wrongdoers, "is the un-Enron."

Or, as Dimon himself has put it,

"Most people have plenty of brains to succeed in business. The difference is character. Leadership is a privilege and a responsibility and an honor. Leaders are the people who should work the hardest, not the least. "

And now -- or technically, two years from now, when JP Morgan Chase CEO William Harrison turns over the reins -- Jamie Dimon steps onto the world stage.

In so doing, Dimon -- much more than his two competent but low key primary rivals, Ken Lewis of Bank of America and Charles Prince of Citigroup -- assumes the mantle of David Rockefeller and Walter Wriston.

Some years ago, Rockefeller, assessing the landscape of silent and secretive and sometimes crooked CEOs, told the New York Economic Club,

"Business leaders must recognize their own and their companies' broader role in the public dispel the notion that corporate executives are faceless bureaucrats, interested only in furthering selfish ends and insensitive to the wider concerns of society."

Mr. Rockefeller will be pleased to learn that his beloved banking industry and his cherished Chase alma mater will soon no longer be "faceless."

The "face" of banking is about to become that of a brash and brilliant, not-yet-50-year-old New Yorker, who works hard, plays fair and takes no prisoners.

Fraser P. Seitel, managing partner of Emerald Partners communications consultancy, served as public affairs director of The Chase Manhattan Bank for 10 years, under three CEOs, Thomas Labrecque, Willard Butcher and David Rockefeller.


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