The Change at David's Bank

At Chase Manhattan, the man on the spot was Rockefeller

For years the standing joke in banking circles was that Chase Manhattan Chairman David Rockefeller kept firing the wrong person. In his attempts to straighten out the nation's third largest bank, he should have let himself go. When Rockefeller became president in 1961, Chase was New York City's largest bank. But it was soon outpaced in both size and earnings by its aggressive rival Citibank.

Suggestions that Rockefeller should step down became so pointed that in 1977 he wrote a memo to the bank's vice presidents, stating that he intended to stay on as chairman until he reached mandatory retirement age in 1980. He added as a personal challenge: "I intend to make those three years the most productive of my career."

Though the banking community was skeptical, Rockefeller has done just that. When he leaves Chase at the time of the next annual meeting in April, the bank will be in good health. In the three years since he wrote that memo, Chase's assets have grown by $22.4 billion to $65.4 billion, and return on assets, the best measure of a bank's performance, soared ahead of rival Citibank in the first half of this year: 59-c- per $100 vs. 49-c-.

David Rockefeller owns 1.7% of Chase Manhattan and is the largest individual shareholder of what is known along Wall Street as David's Bank. During 32 years at Chase, Rockefeller, the youngest of John D. Rockefeller's six grandchildren, floated effortlessly to the top, without ever having made a single loan or spent time as a teller.

Rockefeller's management of the bank in the 1960s and early '70s shocked New York financiers. Says one Wall Street analyst: "He ran Chase like an exclusive club. Bank officers tended to worry more about how many oils from the Chase art collection they had on their walls than about profits." Insiders complained that top managers seemed to be chosen for their tailoring and the virile timbre of their voices rather than for their administrative skills or financial savvy. Rockefeller appeared to be off frequently, polishing his reputation as a world statesman by visiting Yugoslavia's late President Josip Broz Tito or the Shah of Iran.

The results reflected the management.

Return on assets slumped to a miserable 33-c- per $100. In 1975 the Comptroller of the Currency described the state of the Chase back-office operations like check-clearing services as "horrendous." And the bank suffered a series of heavy losses, including $50 million when the department-store chain W.T. Grant went bankrupt in 1976. That year the bank's bad loans reached a staggering $1.9 billion.

In the past three years, however, operations were automated, and Chase introduced such innovations for its customers as bill paying by phone and computerized tellers in some of New York's busiest stores. A group of new executives was recruited to replace some of the about 600 who had been fired. Lackadaisical loan officers became aggressive, and in August Chase led the Eurodollar market by participating in 46 major syndicated loans totaling $1.7 billion.

Chase has prepared for the 1980s with one of the youngest professional management teams of any major international bank. Heading it in April when Rockefeller steps down will be his hand-picked successor as chairman, Willard Butcher, 53, and Thomas Labrecque, 41, who will become president. Butcher directed Rockefeller's three-year operation to get the bank under control; Labrecque rose to the top by trimming the local branch network and then making it profitable.

Looking back on the past three years from his spacious beige-carpeted office on the 17th floor of One Chase Manhattan Plaza, Rockefeller told TIME Financial Correspondent Frederick Ungeheuer: "I helped to create a climate that has finally produced a really professional management team, which was essential to our success." Next spring Rockefeller will begin devoting his time to Rockefeller family foundations. The task there is giving money away, not collecting it.

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