Mergers Banking On Bigness

Chemical and Manny Hanny unwrap a megadeal

Among bankers these days, big is beautiful. In the largest combination of two U.S. banks ever, Chemical Banking last week agreed to acquire New York City rival Manufacturers Hanover in a $2.3 billion stock swap. The merger of the two huge but weak Goliaths, both burdened by hefty portfolios of ailing loans, will create a megabank with assets of $137 billion, second in size among U.S. banks only to New York's Citicorp. Moreover, the deal is likely to prompt a new wave of mergers across the country as other big banks struggle to remain competitive.

But the merger will inflict sharp...

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