Chase’s half-filled shopping basket
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Chase’s half-filled shopping basket

Is Robert Fleming worth $7.78 billion? Possibly, but at this price its new owner, Chase Manhattan, is going to have to work hard to extract value from the UK-based asset management and investment banking firm.

Flemings had been floundering for several years, and has the air of an institution with a fine history and a good deal of promise, but lacking the cohesion and scope to make a success long-term. Its investment banking activities in the UK and Europe hardly register on the scale. Its operations in Asia are formidable but the region is still dragging itself out of a two-year slump. Its asset management operations, though commendable, lack scale at $99 billion under management. Arguably the best way to extract value would have been to break up the businesses and sell them off separately.

Not according to Chase which is one of the few financial institutions that can claim success in its mergers and acquisitions. Ten years ago the sum of the commercial banking parts - Chase, Chemical and Manufacturers Hanover - were just three New York-area banks plodding along with no clear direction. The two-stage merger of these three is one of the few real successes among the US commercial bank mergers, producing a strong retail presence, good relationships with corporates across the US, top-notch loans and foreign exchange services and a solid fixed-income and M&A presence.

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