Chase Manhattan gets added clout in Asia with J.P. Morgan purchase
Chase Manhattan gets added clout in Asia with J.P. Morgan purchase
SINGAPORE (Reuters): Chase Manhattan Corp. will boost its
Asian investment banking business with its US$35 billion
acquisition of blue-blooded global player J.P. Morgan, but the
deal won't catapult it to number one in some big markets.
The companies employ nearly 9,000 in Asia with Chase
accounting for almost 80 percent of that figure. Key offices in
the region are Japan, Hong Kong, Australia and Singapore, with
representative branches dotted throughout the region in even
remote places like Malaysia's Labuan island.
Chase has been active this year in Asia, buying Robert
Flemings Holdings, a stake in Australasian investment bank Ord
Minnett and dumping its retail banking operations in Hong Kong in
a shift to managing money.
The Flemings $7.73 billion buy in April was its biggest step,
as it expanded beyond its traditional banking and debt finance
business. British-based Flemings has major securities broking,
research, fund management and equity investment banking
operations in Hong Kong and around the region.
In Asia's top financial market Japan, globally larger Chase is
outgunned by J.P. Morgan, which employs 850 people, nearly twice
as many as Chase.
J.P. Morgan is strong in Japanese government bonds and asset
management, while Chase's focus is on corporate banking.
Chase is said to be stronger on foreign exchange, where there
could be overlaps, but despite talk of large layoffs in merged
underwriting and currency trading operations in New York and
London, J.P. Morgan staffers in Tokyo were anything but glum.
"I don't think anyone's thinking it's a big negative at the
moment," one Morgan staffer said. "Everyone is quietly excited."
J.P. Morgan and Chase officials in Asia declined to comment on
any possible layoffs.
In July, Chase offered to buy 54 percent of Australasian
investment bank Ord Minnett owned by Ord Minnett staff. The deal
was related to the Flemings purchase done just a few months
prior, since Flemings owned 46 percent of Ord Minnett.
The purchase boosted its profile in retail and institutional
stockbroking in Australia.
J.P. Morgan Australia Pty. has an established role in project
finance and securitization while Chase is a player in fixed
income capital markets, ranks as number three in high-grade
corporate debt for international and Australian issues, and is
also number three in syndicated loans.
Analysts said the gains in a Chase-J.P. Morgan merger were
primarily in trans-Pacific strength, boosting its capability in
U.S. bond raisings.
"The market leader (in Australia) is clearly UBS Warburg which
is involved in mergers and acquisitions, investment banking and
stockbroking," one analyst said.
"Chase's acquisition of JP Morgan isn't going to give them a
weapon that someone else doesn't already have."
Together, Chase and J.P. Morgan will have total assets under
management of $720 billion, making it the third biggest U.S.
funds manager. Based on proforma full-year 1999, J.P. Morgan
Chase & Co. will have revenues of $31 billion and earnings of
$7.5 billion. About half its earnings will come from investment
banking.
But competition will still be stiff.
The top three bookrunners of Asia equity deals in the first
quarter of 2000 were Goldman Sachs, BNP Peregrine and China
International Capital Corp., according to Thomson Financial.
In 1999, for Asia excluding Japan mergers and acquisition
advisory, Goldman Sachs, Morgan Stanley Dean Witter and Merrill
Lynch & Co. Inc. took top honors, capturing 54.6 percent of the
total deals valued at $34.9 billion. J.P. Morgan was number five
and Flemings number eight, Thomson said.