The Fruits of Patient Groundwork

Two years of quiet preparation have put the US banker in a position to do the deals that Wall Street expected, says Gary Silverman.

When Bank One named Jamie Dimon chairman and chief executive in March 2000, Wall Street expected big things. After all, as the top lieutenant to Sandy Weill for more than a decade, Mr. Dimon had helped put together Citigroup, the largest and most diversified US financial company.

But in his two years at the sixth biggest US bank, Mr. Dimon has made no truly headline-grabbing deals. Instead, the one-time boy wonder of Wall Street has devoted himself to internal repairs, working particularly hard on the apparently prosaic task of rationalising Bank One's hotchpotch of computer systems.

Mr. Dimon's difficulties say much about the carelessness with which many bank mergers were executed during the 1 990s. While competitors such as Bank of America and First Union overpaid for acquisitions, Bank One failed to integrate what it bought.

On the surface, its deals transformed the Chicago-based group's position. It grew into the largest bank in the central US and the third biggest credit card issuer in the country. But it never put its operations on a common computer platform. By the time Mr. Dimon arrived, there were at least six main deposit systems operating in parallel.

Remediation has cost Mr. Dimon time — the grey in his hair attests to that—but he hopes this investment is about to pay off handsomely. Through the work done on the bank's old deals, Mr. Dimon has created a cadre—500 strong now—of operationally minded managers who will be able to integrate future banking acquisitions.

"If we can do it here, we can do it somewhere else," says Mr. Dimon, 46, who left his native New York to run Bank One. "I call them the 101st Airborne." Mr. Dimon is drawing nearer to the day he will be able to give his troops an attack order but is not there yet. It could take until early next year for Bank One to convert its deposit systems to one platform. That is an extraordinary delay, considering the company was created in 1998, by the merger between Bank One of Columbus, Ohio, and First Chicago NBD of Illinois.

In the meantime, Bank One's failure to combine systems is costing it hundreds of millions of dollars a year. Parallel systems defeat a crucial objective in a typical bank merger: saving money by serving more customers on one platform.

Austin Adams, chief information officer, says Bank One spends $1 .9 billion a year on technology, or 16.4 percent of its non-interest expense. He believes that is far more than similarly sized competitors. By his estimate, the figures are $1.3 billion, or 10.1 percent, at Wells Fargo and $1.3 billion, or 9.4 percent, at Wachovia. The other banks declined to comment.

Running different systems also prevents Bank One from taking advantage of its geographical breadth; its branches stretch across 14 states through the middle of the country but a customer in one state will not necessarily be known to a branch in another. Bank One calculated that of 120 000 customers who left the bank last year because they moved home, 75 000 ended up living within five miles of another Bank One branch.

It got into this predicament because of its growth strategy in the 1990s. To persuade other banks to sell, it let them operate much as they had before. Bank One eventually realized its folly and began conversions but by then it was too late. Facing earnings shortfalls, it suspended the effort in order to save the immediate costs just before Mr. Dimon was hired.

He restarted the conversions in earnest, bringing all the branches in Texas, Louisiana, Arizona and Utah on to common platforms last year. Coming next will be Michigan, which is due for completion in June, and Illinois, which is supposed to be converted by November but could slip into next year.

Converting systems is tricky because the process goes beyond writing computer codes. Deciding on which system to keep often involves choosing between particular business practices. Turf battles can break out over such arcane differences as how many free cheques a customer will receive each month.

Bank One, for example, opted to use the deposit system from the old Ohio- based operation over alternatives in Michigan and Illinois, which were better suited to commercial clients. Mr. Dimon said it did so because the Ohio system was used in more places. Using that platform meant converting fewer states—and therefore affecting fewer customers.

"There was a political battle over it," Mr. Dimon says. "We had to go to one [system]. You can make a list of all the functional differences between system A and system B and in reality, by the time you are building it, you are going to add a lot of one to the other."

Indeed, one thing Mr. Dimon likes about the conversion process is the opportunity it affords to consider different approaches. In discussing the issue, Mr. Dimon returns frequently to a single word: conversation. He wants his managers to hold "common- sense" conversations, to keep talking. "In these customer services things, there are a lot of easy fixes and some are more complex," he says. "But the knowledge that gets built by people who do this is astronomical."

During the Michigan conversion process, says Ralph Bierdeman, Mr. Dimon's integrations executive, Bank One has identified 1 218 "gaps and differences" between its deposit system in Michigan and its main platform. Twelve of these discoveries have led to system-wide enhancements.

"You could spend your whole life in banking and you would not know 1 200 differences between two banks," Mr. Bierdeman says. "We do large programme management. There is a lot of work you can apply to different things."

The development of these capabilities suggests Bank One is becoming more inclined to buy other banks. Mr. Dimon says he has grown to like local banking—products and services geared for individuals and small or medium-sized businesses.

Bank One officials suggest a regional banking acquisition would probably have to wait for the completion of the Michigan conversion. Assuming that goes well—and it is only weeks away—the bank could begin working on a big bank deal.

"Our best business is something we call regional banking," Mr. Dimon says. "It's not large corporate [clients]. It's the business where you have to be there to do the business." He also hopes to increase his presence in national businesses—such as credit cards, payment systems and investment products—that can be done through local banks.

Less clear is what Mr. Dimon plans to do in corporate banking. He calls these telephone businesses, by which he means investment banking work that is less reliant on a local physical presence than on technical abilities.

He knows about this side of the business from his Wall Street days but his goals at present sound fairly limited. Although he has scaled back corporate loans, he will continue to lend in order to sell big clients other products, such as foreign exchange services or cash management. He is stopping short of big global business such as equity underwriting.

Whether Mr. Dimon does more will depend on a current debate in banking. The issue is whether the need to lend will force traditional investment banks to combine with commercial banks. Mr. Dimon believes that banks bundling loans with other products will prevail but acknowledges that not everyone agrees—just yet.

"The competitors may not like it but if I can sell you a car at a small loss and I can make money on the tinted glass, the radio and the seat covers, well, I hate to tell you, that's capital markets. You are going to have to compete," he says. "I think you will continue to see that happen. But it's not clear and everyone is going to have to make their own decisions. We are right in the middle of the debate."

Whatever the outcome, there is no doubting Mr. Dimon's interest in that discussion. On the windowsill by his desk there is a street sign. It reads: Wall St.

Reading aids and expressions:

1. Mr. Dimon is drawing nearer to the day he will be able to give his troops an attack order but is not there yet.
在此句中

1. Mr. Dimon is drawing nearer to the day but is not there yet是主句
2. he will be able to give his troops an attack order是个省略了关系副词that 或when的限制性定语从句，修饰名词day

2. First Chicago NBD of Illinois

Bank One Corporation, based in Chicago, Illinois, was the sixth-largest bank in the United States. It traded on the New York Stock Exchange under the stock symbol ONE. The company was acquired by JPMorgan Chase & Co. on July 1, 2004.

The bank traces its roots to First Bancgroup of Ohio, founded as a holding company for City National Bank of Columbus, Ohio and several other banks in that state, all of which were renamed "Bank One" when the holding company was renamed Banc One Corporation. With the beginning of interstate banking they spread into other states, always renaming acquired banks "Bank One", though for a long time they resisted combining them into one bank. In 1998, Banc One Corporation merged with Chicago-based First Chicago NBD Corporation to form Bank One Corporation, and headquarters moved from Columbus to Chicago. Adverse financial results led to the departure of CEO John B. McCoy, whose father and grandfather had headed Banc One and predecessors. Jamie Dimon, a former key executive of Citigroup, was brought into head the company.

Its businesses include commercial banking, retail banking in more than a dozen states, credit card services, and financial management for individuals and corporations. Although the 1998 merger created one of the country's largest banks, it performed poorly until Jamie Dimon, a former Citigroup executive, became chief executive officer and revamped operations. Based in Chicago, Illinois, Bank One is a leading provider of personal banking services, business loans, and automated clearinghouse services. By the beginning of the 21st century, its First USA subsidiary was the largest issuer of Visa credit cards.

3. Running different systems also prevents Bank One from taking advantage of its geographical breadth; its branches stretch across 14 states through the middle of the country but a customer in one state will not necessarily be known to a branch in another.
这是个由三个分句构成的并列句，它们分别是

1. Running different systems also prevents Bank One from taking advantage of its geographical breadth
2. its branches stretch across 14 states through the middle of the country, 和
3. a customer in one state will not necessarily be known to a branch in another

前两个分句用分号隔开，后两个分句用连词but连接

4. Bank One calculated that of 120,000 customers who left the bank last year because they moved home, 75,000 ended up living within five miles of another Bank One branch.
在此句中

1. Bank One calculated是主句
2. that of 120,000 customers who left the bank last year because they moved home, 75,000 ended up living within five miles of another Bank One branch 是个由主从连词that引导的宾语从句，作动词calculated的宾语，其中
3. who left the bank last year because they moved home 是个由关系代词who引导的限制性定语从句，修饰名词customers，其中的because they moved home是个原因状语从句，修饰动词left

5. Coming next will be Michigan, which is due for completion in June, and Illinois, which is supposed to be converted by November but could slip into next year.

1. 这句由于主语较长，因而采用了倒装的语序，主语Michigan, which is due for completion in June, and Illinois, which is supposed to be converted by November but could slip into next year 放到了句子的后部，其中
2. which is due for completion in June和which is supposed to be converted by November but could slip into next year是两个由关系代词which引导的非限制性定语从句，分别修饰名词Michigan和 Illinois

6. You can make a list of all the functional differences between system A and system B and in reality, by the time you are building it, you are going to add a lot of one to the other.

1. 这是个由并列连词and连接的并列复合句：
2. You can make a list of all the functional differences between system A and system B是个简单句
3. in reality, by the time you are building it, you are going to add a lot of one to the other是个复合句，其中的by the time you are building it是个由by the time引出的时间状语从句，修饰动词are going to add

7. Indeed, one thing Mr. Dimon likes about the conversion process is the opportunity it affords to consider different approaches.
在此句中

1. one thing about the conversion? process is the opportunity 是主句
2. Mr. Dimon likes是个省略了关系代词that的限制性定语从句，修饰名词thing
3. it affords 也是个省略了关系代词that的限制性定语从句，修饰名词opportunity
4. 动词不定式to consider different approaches坐定语，也修饰名词opportunity

8. But the knowledge that gets built by people who do this is astronomical.
在此句中

1. But the knowledge is astronomical是主句
2. that gets built by people who do this是个由关系代词that引导的限制性定语从句，修饰名词knowledge, 其中的who do this是个由关系代词who引导的限制性定语从句，修饰名词people

9. Assuming that goes well – and (that) it is only weeks away – the bank could begin working on a big bank deal.
在此句中

1. the bank could begin working on a big bank deal是主句
2. Assuming that goes well – and (that) it is only weeks away是个现在分词短语，作状语，表示假设的条件，其中的that goes well 和 (that) it is only weeks away是两个宾语从句，作assuming的宾语

10. He also hopes to increase his presence in national businesses – such as credit cards, payment systems and investment products – that can be done through local banks.
在此句中

1. He also hopes to increase his presence in national businesses – such as credit cards, payment systems and investment products是主句，such as credit cards, payment systems and investment products作定语，修饰名词businesses
2. that can be done through local banks是个由关系代词that引导的限制性定语从句，修饰名词businesses

11. He calls these telephone business, by which he means investment banking work that is less reliant on a local physical presence than on technical abilities.
在此句中

1. He calls these telephone business是主句
2. by which he means investment banking work that is less reliant on a local physical presence than on technical abilities 是个由关系代词which引导的非限制性定语从句，修饰名词telephone business；其中的that is less reliant on a local physical presence than on technical abilities是个由关系代词that引导的限制性定语从句，修饰名词work

12. stop short of
to decide that you are not willing to do something wrong or dangerous, though you will do something similar that is less dangerous 险些做某事；在（做）某事前突然住手，e.g.
1）The US government supported sanctions but stopped short of military action.美国政府支持制裁，但在要采取军事行动之前突然刹了车。
2）He just stopped short of calling her a murderer. 他差点儿把她叫做凶手。

13. not … just yet
not now, but probably soon现在不，e.g.
1）I can't leave just yet. I've still got a couple of letters to write.我现在还不能走，我还要写两封信。

14. I hate to tell you
used when saying something that you do not want to say, for example because it is embarrassing 我不想告诉你，e.g.
1）I hate to tell you, but I was glad when he went home.我不想告诉你，但是当他回家时我很高兴。

Questions:

1. What does carelessness imply, with which many bank mergers were executed during the 1990s, and what came as a consequence?
2. What resulted from Bank One’s failure to put its operations on a common computer platform?
3. When and how was Bank One created?
4. What prices did Bank One pay for the co-existence of its six independent deposit systems?
5. What contributed to the co-existence of Bank One’s six parallel systems?
6. What is one of the crucial objectives in a typical bank merger?
7. How much dies Bank One spend on technology and how much does it account for in the non-interest expense?
8. What possibly are the features of the products and services provided by local banks?
9. What is the current debate issue in banking?
10. What internal repairs did Jamie Dimon devote himself to?