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Megabank Mergers: J. P. Morgan Chase-Bank

831 Words4 Pages

Megabank mergers have been a part of banking for the past 20 years. Most of all the well known banks we see on a daily basis like Wells Fargo, Chase, and Bank of America are all results of mergers, maybe even multiple mergers at some point in time. As far as megabanks go though I will start with J.P. Morgan Chase-Bank, they were announced around early 2004 and at this time they ranked second place for the largest bank in United States of America. J.P. Morgan Chase-Bank was estimating roughly 1.1 trillion dollars’ worth in assets, and the merger was only about 59 million dollars; the extreme amount of assets completely outweighs the high costs of such a large merger. This was all possible to become such a success because Bank One had an outstanding …show more content…

This merger happened shortly after Citigroup had an agreement to buy Wachovia for $1 a share and also to take over most losses on their loan portfolio, after Wells Fargo jumped in they pulled out of the previously discussed agreement with Citigroup. Wells Fargo had a well known reputation of being a very strong company in many ways and told Wachovia that their proposition had no need for the FDIC, which naturally was very attractive and also $20 billion will be raised by selling new shares of stock. Something that greatly attracted Wells Fargo to invest in this deal is they will be gaining the large retail type banking they’ve been searching for which Wachovia was perfect for. Not only did Wells Fargo have a great reputation but, Wachovia has a strong team in their retail banking management group which made these two a great fit. These two seemed like a perfect match for one another, they also had agreed that three of the directors from Wachovia would join Wells Fargo’s board. Wachovia’s share’s had reached a low of $2, then back to $3.91, and then finally closed with a price of $6.53 before the deal took place. They also had billions of their money in the loan portfolio tied up in troubled mortgages that accumulated from their merger with Golden West Financial. A campaign was initiated to raise enough capital that would allow Wells Fargo

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