Bank One Names James Dimon to Top Posts

The former Citigroup executive will immediately become head of the troubled bank.
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Updated from 5:44 p.m. EST

Bank One

(ONE) - Get Report

named James Dimon, a former top executive at

Citigroup

(C) - Get Report

, as its new chairman and chief executive Monday, three months after its board pushed his predecessor, John B. McCoy, to retire.

Dimon, who had been president of Citigroup and was widely expected to become chief executive of Citigroup until he abruptly resigned in 1998, will immediately become head of troubled Bank One, the nation's fourth-largest banking company.

The appointment of Dimon comes at a time when Bank One is under a considerable amount of pressure because of the poor performance of its credit card and consumer division,

First USA

, which accounts for about a third of the Chicago-based company's earnings.

Dimon, 44, has also served as chairman and co-chief executive of

Salomon Smith Barney Holdings

, and was president and chief executive of

Travelers Group

for seven years before it merged with Citicorp to form Citigroup.

Bank One has recently made some other moves to shore its ailing business. Earlier this month, the company said it would eliminate 5,100 jobs, or about 5.6% of its workforce, to reduce costs as the bank struggles to raise earnings and its share price.

Speculation emerged about Dimon's appointment Monday afternoon, and shares of Bank One soared 3 1/2, or 12%, to close at 31 7/8 even before the move was announced.

To signal his commitment to push Bank One out of its slump, Dimon said he would buy 2 million shares of Bank One's common stock.

Bank One has seen its stock price fall by roughly half since First USA was first reported to be in trouble last August. The company has warned four times since then that it would not meet Wall Street's earnings estimates.

In October, Bank One's board narrowed McCoy's responsibility to focus on First USA, and stripped him of his responsibilities as president. Those moves, and McCoy's subsequent inability to turn around struggling First USA, were widely seen as the reasons for his departure from the bank in December.

McCoy, 56, was chief executive of Bank One for 15 years before his departure last December. His father had been the company's chief before that, and the two are widely credited with building a small bank into a financial giant.

Dimon had been the protege of Sanford I. Weill, who essentially built Travelers Group from the ground up, and with whom he worked closely for more than a decade.

Dimon left Citigroup in 1998 as the company was experiencing growing pains and cultural infighting following the merger of Travelers and Citicorp. Until his departure, Dimon was expected to be groomed by Weill and John S. Reed, co-chief executives of Citigroup, to eventually take the helm of the financial giant.

But concerns about difficulties in actually merging Citigroup and Travelers led Weill and Reed to change their plans and simplify the hierarchy at the company, which would have offered Dimon less authority at Citigroup than he wanted. Some people at the time had also cited personal differences between Dimon and Reed as a reason for his departure.