BANKING MERGER

Hokitika Guardian, 1 May 1930, Page 8

BANKING MERGER

GREATEST IN THE WORLD

NEW YORK FUSION

The .largest bank in the world, with resources in excess of 2.80J.C00,0L10 dollars, was formed on March 18th. in New York, when directors of the Chase National Bank, the Equitable I'riiSu Company and the Interstate i rust Company voted to approve a consolidation of the three institutions. The combined bank will operate under the name and charter cjf the Chase National Bank. The' new Bank will exceed in size every other banking institution in America or abroad, jby every measure of comparison. Total deposits of the enlarged bank will come to almost 2,100,000,000 dollars, marking the first time tliat deposit's of any bank have exceeded 2,000,000,000d0L and total capital funds, including those of security affiliates, will amount to almost 500,000.000 dollars.

TERMS OF THE CONSOLIDATION. 'lernis of the eonsilidation call for •an exchange of shares of the Equit. a ole and the Interstate for shares ol the Chase National. Bank. To provide the additional stock lor this exchange;, the capital of the Chase is to be increased from 105,000,000 dollars, represented by 5,250,000 shares of 20 dollars par value, to 148,000,000 dollars, represented by 7,400,000 shares of 20, dollars par value. Of the additional shares, 2,000,000 will be given to stockholders of the Equitable Trust in exchange for their shares on a basis of lour shares of Chase for live shares of Equitable. Shareholders of the Interstate Trust Company will receive 115,019.20 shares on the basis of 32-100 of a share of Chase bank stock for each share of interstate held. The reinainng 34,£BO.BO shares are ’to be sold in a manner to be determined by the directors of the. Chase.

The plan of the exchange of shares of the Interstate directly for those of the Chase was a last-minute development. It had been understood previously that the Interstate was first to be merged with the Equitable and then the Equitable was to be combined with the Chase.

The capital of the consolidated bank after giving effect to the increase in stock providing for the exchange of shares of the Chase Bank for those of the Equitable and the Interstate will be 148,'00,000 dollars. Surplus will also be 148,000,000 dollars, and undivided profits and reserves will be approximately 7f),000,000 dollars. This will give the bank capital funds of approximately 368,000,000 dollars. The enlarged Chase Securities Corporation with which the recently organised Equitable Corporation is to

be merged will have capital assets of approximately 125,000,000 dollars. This will give the enlarged bank total capital assets, including those of the security affiliate amounting to approximately 493,000,000 dollars.

APPARENT DROP IN CAPITAL

On the basis of the latest statements, combined capital of the three insitutions totals 162,188,700 dollars, ol which 105,003,000 dollars represents the Chase, 50,000,000 dollars the Equitable, and 7,188,700 dollars the Interstate. The explanation of the apparent drop in capital from this indicated figure of 162,188,700 dollars to 148,ow,ooo dollars is contained in the terms of the exchange of stock between the merging banks. The offer ot four shares of- the 20 dollars par value stock of the Chase for five shares o- the 20 dollars par. value stock of the Equitable has the effect of nominally reducing the par value of the Equitable shares by one-fifth. Similarly, the offer of one share of Chase.for approximately thre6‘shares of Interstate cuts down the pah value of the latter shares. This reduction in capital is only apparent, however, for the funds will be added to the undivided profits of the institution and will figure as part of its total capital funds.

The combined resources of the three banks which will compose the merged institution, on the basis of their respective statements for December 31, 1929, wijl total 2,814,535,634 dollars. To this total the Chase National Bank will contribute 1,714,829,447 dollars, the Equitable Trust Company 1,013.970,793 dollars, and the Interstate Trust Company 85,735.389 dollars. Deposits of the institution will total 2,073,644,654 dollars, of which 1.248,218,351 dollars will be contributed by the Chase, 765,344,701 dollars by the Equitable, and 60,081,601 dollars by the Interstate.