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Chase Manhattan,

Chemical Banking

to merge

NEW YORK: Chase Manhattan Bank and Chemical Banking Corp plan to merge in a stock-swap that will create an institution with $300 billion in assets and $20 billion in shareholders' equity, the companies said in a joint statement on Monday.

The boards of directors approved the merger on Sunday, the banks said. The new company, which will adopt the Chase name, is expected to cut about 12,000 jobs from a combined staff of about 75,000.

The banks said Chase shareholders will get 1.04 shares of Chemical common stock for each share of Chase common stock they hold in a tax-free transaction. The deal is expected to close in the first quarter of 1996.

All series of Chase preferred stock will also be swapped for similar Chemical preferred stock.

The deal is expected to save the new institution about $1.5 billion annually, with those savings seen beginning within three years.

The new company expects to see double-digit per-share earnings growth, the banks said, and achieve a return on equity of at least 18 percent.

Walter Shipley, 59, Chemical's chairman and chief executive officer, will assume the same posts in the new institution.

Chase chairman and CEO Thomas Labrecque, 56, will be president and chief operating officer of the new Chase.

As part of the deal, the banks have granted each other options to purchase up to 19.9 percent of the other's outstanding common stock under certain conditions, including a merger proposal or tender offer by a third party that would interfere with the transaction.

Shareholder and regulatory approval is still needed for the transaction, the banks said.-Reuter