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James Dimon, the 44-year-old hard-charger once considered Citigroup's likely heir apparent, wants to recast ailing Chicago-based Bank One Corp. into a powerhouse both for its shareholders and its Midwestern banking clients. Dimon, named chief executive on Mar. 27, says he aims to strengthen the bank "so it is predator and not prey" in the ongoing industry consolidation. And he is so convinced that he can pull it off, he says, that he's buying some 2 million shares of Bank One's battered stock himself.
But Dimon faces a daunting job. While consistently profitable, Bank One's growth engines
have stalled in recent years. Most dramatically, its once-soaring credit-card division has
been in turmoil as it has struggled with slow growth and consolidation in the fickle
business. Morale companywide is suffering as the bank has moved to cut staff and sell off
businesses. And its cyber strategy -- once a core part of the bank's long-term plans -- is in a shambles as Bank One mulls dumping troubled WingspanBank.com, its online bank.
"MOCCASINS OF THE PEOPLE."
For now, Dimon is planning to use his much-vaunted talents as a quick study to get a sense of where he should take the bank. The former president of Citigroup, former chairman and co-CEO of Salomon Smith Barney, and former president of Travelers Group says he wants to hit the road to get to know the managers at the far-flung bank's locations across the Midwest. He jokes that his three biggest priorities will be to get to know the people and the business and to read a lot -- and then establish his two other priorities. "You have to walk in the moccasins of the people before you know what's going on," says Dimon.
Dimon will have a lot of walking to do to bring together dispirited Bank One staffers. The
bank has been riven by splits even among its directors, who brought very different styles
from the bank's three major predecessor institutions -- Detroit's NBD Bank, First National Bank of Chicago, and Banc One from Columbus. To bridge the gaps, he will have the help, for a time at least, of Verne G. Istock, who has been acting chief executive officer since John B. McCoy quit in December. Istock is remaining as president to assist Dimon, though Istock says he's staying on only for a transition period.
Most crucially, perhaps, Dimon must rebuild bridges to Wall Street. The bank's credibility
has suffered enormously as it failed to live up to past promises of roaring growth, even
though it has managed to stay profitable and even posted respectable gains in
net income. Analysts turned so sour on the company that many were convinced it was
sale bait for Citigroup. Their distaste helped drive down the stock from a high of more than $63 a share last May to just above $23 in February. Apparently anticipating Dimon's appointment -- announced after the end of trading on Mar. 27 -- the stock rose 12%, to nearly $32.
"FABULOUS PLATFORM."
Clearly, Dimon's people strengths were among the skills that drew the Bank One board to him. At a Chicago press conference, he joked easily with reporters who've long covered him -- wondering why the New York press all called him by his preferred nickname of Jamie while the Chicago press called him Mr. Dimon. And he carefully noted that he would study what analysts have to say about Bank One, noting he can learn much from them. He also praised the bank's employees, saying that they own a hefty amount of the company's stock and want to do the right things for their own financial well-being. He said he'd like to increase the amount of stock staffers hold.
Contrary to Wall Street's expectations, Dimon insists that he's not there just to groom the
bank for a sale. Noting that he doesn't need to work, after having been enriched by the
mergers that built Citigroup, he says he wouldn't put his family through the big move to Chicago if he didn't believe he could make the bank healthy again. "I think Bank One is a fabulous platform," said Dimon, insisting he's not there to "flip" it in a couple years.
Just what he will do to make that platform pay off is a big question mark, however. Wall
Street almost certainly will give him a long leash -- one that shouldn't jeopardize too much of the $64 million or so of his own money that he's likely to sink into the stock. But just how and when he will make the bank a star again is, indeed, a $64 million question.
By Joseph Weber in Chicago EDITED BY DOUGLAS HARBRECHT
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