Big News in Banking: Chase Merges With J.P. Morgan

This week marks an historic milestone in banking. Chase Manhattan Bank [1] has agreed to buy J.P. Morgan [2] for almost $40 billion in stock.

The new company, which will be known as J.P. Morgan Chase, will have assets of $675 billion and will rank third as a financial services company following Citigroup Inc. and Bank of America Corp.

The buyout is attributed to being able to combine attributes of both companies as they seek a larger piece of the pie. Both firms had tried to add services like securities underwriting and merger advice to stay competitive with both Goldman Sachs Group Inc. and Morgan Stanley Dean Witter & Co.