J. P. Morgan Chase (www.jpmorgan.com) and Bank One (www.bankone.com) have agreed to merge in a move that establishes the second largest banking franchise in the United States. The combined company will have assets of $1.1 trillion, 2,300 branches and top positions in retail banking and lending, credit cards, investment banking, asset management, treasury and securities services. The companies anticipate cost savings of $2.2 billion to be achieved over a three-year period.

The transaction creates an enterprise with a combined market capitalization of approximately $130 billion.

The merged company will be known as J.P. Morgan Chase & Co. with corporate headquarters located in New York. The retail financial services business, which includes the consumer banking, small business banking, and consumer lending activities (with the exception of credit card), will be headquartered in Chicago. Chicago will also serve as the headquarters for the middle market business.

Both JPMorgan Chase and Bank One offer extensive payables outsourcing, and image archive services. It was not immediately clear what affect, if any, the merger would have on those services.

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