Bank One-Chase merger marks 20 years

When New York’s J.P. Morgan Chase announced in January 2004 that it was buying Bank One, formerly the First National Bank of Chicago, there was much civic hand-wringing over the loss of the city’s last hometown banking giant.

This week, employees at Chase Tower celebrated the 20th anniversary of the deal’s closing with a commemorative brochure and free donuts.

While the $58 billion Bank One acquisition moved the headquarters to New York, it also saved potentially thousands of jobs and put Chicago at the center of what would become the nation’s largest bank.

“We ended up being a great bank,” said Jamie Dimon, 68, chairman and CEO of JPMorgan Chase, and the architect of the merger. ”We delivered to Chicago what we said we would deliver, and we did a good job.”

Without the merger, Dimon said, the struggling Chicago-based bank might not have thrived, or even survived, the post-millennium financial crises to come.

Founded in 1863, the First National Bank of Chicago was the city’s legacy financial institution for more than a century, marking its turf with the eponymous 850-foot Loop skyscraper built in 1969. The tower would go through a number of name changes during a flurry of millennium-era mergers.

The bank’s parent company, First Chicago, merged with NBD Bancorp of Detroit in 1995, with Chicago winning out as the headquarters. In 1998, Columbus, Ohio-based Banc One acquired First Chicago NBD, relocating to Chicago and changing the name to Bank One.

But the newly merged Bank One failed to meet expectations, with earnings disappointments, a falling stock price, factional in-fighting and the departure of top executives. In 2000, Bank One landed Dimon, a star New York banker and consummate dealmaker, to right the ship.

The son of a stockbroker, Dimon earned his MBA from Harvard in 1982 and began his financial career at American Express. He then moved on to Commercial Credit, which through a series of acquisitions over more than a decade, Dimon helped build into banking behemoth Citigroup.

The April 1998 megamerger of Citicorp and Travelers Group created what was then the largest financial services company in the world. But within months of the merger, Dimon was forced out as president by Sanford Weill, his longtime mentor and chairman of the company.

”I had a falling out with Sandy Weill, who fired me,” Dimon said. “And that started me on the path of looking for what else to do.”

A free agent, Dimon considered a number of options including an offer to become CEO of Home Depot. But when Bank One came calling, Dimon jumped at the challenge of building, or in this case, rebuilding a major bank.

Named chairman and CEO of Bank One in March 2000, Dimon and his family moved to Chicago and immediately made a splash. He bought a Gold Coast mansion, fittingly on Banks Street, schmoozed with then-Mayor Richard M. Daley and joined civic organizations, where he found leaders receptive to his ideas on fixing the bank.

Dimon tackled a long list of challenges, from the mismatched cultures of previous mergers to banking systems, marketing and the credit card company, which he said was the “worst part of the problem.”

While he made great strides by cutting costs, cleaning up the credit card business and getting Bank One’s stock to rise sharply, another idea percolated throughout his tenure: finding a potential merger partner.

“I actually, even back then, thought if there would ever be a natural merger, it might be with a J.P. Morgan-type,” Dimon said.

Formed by the December 2000 merger of J.P. Morgan and Chase Manhattan, the New York-based bank was then the third largest in the U.S. behind Citigroup and Bank of America.

As Dimon settled into his role at Bank One, he met regularly with William Harrison, chairman and CEO of J.P. Morgan Chase, where the merger topic often came up.

“Whenever I came to town, I would go visit Harrison, and he and I started talking about the business logic and the fit,” Dimon said. “But the conversations taking place at one point, they got very serious.”

In 2004, J.P. Morgan Chase announced it was buying Bank One for $58 billion. Dimon was named president of the combined bank, which kept the newly stylized JPMorgan Chase name and New York address. He was elevated to CEO in 2006 and chairman the following year.

While the headquarters shifted to New York, Dimon lived in Chicago until 2007 so his two daughters could finish high school. Then the native New Yorker moved back east — just in time to meet the banking challenges and opportunities of the new millennium.

During the Great Recession in 2008, an opportunistic JPMorgan Chase surpassed Citibank as the largest U.S. bank, helped by its acquisition of failed savings and loan giant Washington Mutual, which included a $307 billion loan portfolio.

In March 2023, Silicon Valley Bank and Signature Bank collapsed amid bank runs and allegations of lax oversight. The following month, First Republic Bank failed under similar circumstances. On May 1, JPMorgan Chase acquired the majority of First Republic’s assets, including a $173 billion loan portfolio and $30 billion of securities. It also assumed $92 billion in deposits.

JPMorgan Chase remains the largest U.S. bank with $4.1 trillion in assets.

Despite a career spent building enormous banks, Dimon doesn’t believe that bigger is always better.

“Big is not better,” Dimon said. “Better is better.”

Since the 2004 merger, the Chicago operations of Chase have flourished, with a current count of 15,500 area employees, including about 7,200 who regularly work out of Chase Tower, where Dimon once occupied an office on the ninth floor.

In February, the bank announced that the sloping 60-story skyscraper at 10 S. Dearborn St. will be transformed into a modern collaborative environment. Work has begun on improvements that include a new fitness center, an updated food hall, a refreshed outdoor plaza and enhanced conference centers.

After exploring other locations, Chase decided to double down on the tower, which represents a commitment to both the struggling Loop and the distinctive building itself.

“It’ll take several years and hundreds of millions of dollars,” Dimon said. “It’s a beautiful building.”

Chicago office buildings are still at 56% of pre-pandemic occupancy levels, according to the latest weekly report by Kastle Systems. But Dimon has been bucking the remote and hybrid work trend since the height of the pandemic, pushing for a return to the office as early as September 2020.

In April 2023, he issued a mandate that the bank’s managing directors return to the office five days a week. Other employees need to be in the office at least three days a week, Dimon said.

Getting younger employees into the office, he said, is a priority.

“Young people need it, and we already see evidence young people who are doing too much work from home are being left behind in terms of promotion, pay and relationships,” Dimon said.

Dimon, who not only rebuilt the bank but his own career in Chicago, remembers his years in the city fondly, starting with the Bank One turnaround.

But winning over a skeptical city, he said, was hard work.

“We put a lot of pressure on ourselves to right the ship,” Dimon said. “I remember traveling around Chicago, wherever I went, I was being yelled at because our customer service sucked, which I acknowledged.”

The merger with Chase also generated significant backlash, with some Chicagoans concerned the takeover would diminish the city’s standing as a financial center. Dimon promised the bank would be stronger and more civic-minded as part of something larger.

Now 20 years later, the New York banker’s connections to Chicago remain strong, with his older brother, retired physicist Peter Dimon, calling the city home. Beyond the family ties, there is also a thriving national bank where a legacy Chicago bank once stood.

The corporate address is New York and the Chicago moniker is history, but the bank is still integral to the city, a point of pride for Dimon.

“While it’s not the headquarters, it’s one of the most important companies in Chicago,” Dimon said.

rchannick@chicagotribune.com