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JPMorgan, Bank One chase Citigroup’s number one mantle

JPMorgan, Bank One chase Citigroup’s number one mantle

(20 January 2004 – USA) JPMorgan Chase’s purchase of Bank One for US$58 billion (A$75 billion) means the bank is now breathing down the neck of financial services behemoth Citigroup. The combined entity, which is still subject to regulatory approval, will create a bank with about US$1.1 trillion (A$1.4 trillion) in assets compared with Citigroup’s US$1.2 trillion (A$1.8 trillion).

The merger is the third biggest in US financial services history, following the merger of Travelers Group and Citicorp in 1998 for US$70.2 billion (A$92.3 billion) and NationsBank’s purchase of BankAmerica for US$59.2 billion (A$77.8 billion).

Mergers and acquisitions activity is expected to continue in the US financial services sector with the merger of FleetBoston Financial and Bank of America next in the pipeline. Other banks are tipped to follow suit as the US banking landscape experiences another upheaval.

Once completed, Citigroup, JPMorgan and the combined FleetBoston/BoA will all hold more than US$500 billion (A$657.7 billion) in customer deposits.

The merger of JPMorgan and Bank One is expected to lead to some 10,000 job cuts and extend JPMorgan’s consumer banking footprint in the mid-west and southwest of the US.

European banking analysts have viewed the merger as bad news for the likes of HSBC, Royal Bank of Scotland and BNP Paribas, all of which now have to ask themselves whether it is worth competing with these giants for an increasingly expensive stake in the US market.

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