BMO acquires Harris Bank, Chicago

Excerpt from A Vision Greater Than Themselves: The Making of The Bank of Montreal, 1817-2017 by Laurence B. Mussio

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Left to right: W.D. Mulholland, chairman of Bank of Montreal and Kenneth West, chairman of Harris Bankcorp, shake hands on the acquisition of Harris Bank, 1984.

“The corporate historian delving in to the archives of the Bank of Montreal a few decades from now,” suggested a particularly prescient article in the Toronto Globe and Mail in April 1984, “probably will find that 1984 was a watershed in the institution’s evolution.” The first change was the completion of the Domestic Development Program, which dramatically reorganized personal, retail, and commercial banking in the 1980s. The second epochal change came with the move to acquire Harris Bankcorp, Inc. of Chicago.

On a late summer day in 1984, the day after Labour Day, the Bank of Montreal officially acquired Harris Bankcorp, one of the great Chicago banks – established in 1907 as a bank, but with roots extending as far back as 1882. The Chicago bank became a wholly owned subsidiary of the Bank. Harris CEO Ken West (right, in photo) was a vital partner in the success of the acquisition.

With the stroke of the pen of BMO chairman and chief executive officer William D. Mulholland (left, in photo), what emerged was his generation’s greatest strategic achievement. “This transaction gives Bank of Montreal a full operating capability both in Canada and the United States, a status which is probably unequalled by any other bank,” Mulholland remarked at the time. Upon his return, when Canada Customs asked him whether he had acquired anything on his trip to United States, Mulholland replied that he had indeed – a bank!

It was agreed that the Harris organization would continue to operate under its own distinguished name and solid reputations: it had assets of US$7.8 billion and was the thirty-fourth largest bank in the United States. The subsidiary Harris Trust and Savings Bank managed trust assets of US$13.9 billion, ranking seventh in the United States.

The September signing had come in the wake of the approval of both boards of directors in October 1983, the approval of the shareholders in January 1984, and the approval of the United States Federal Reserve on 25 July 1984. The price tag for the Harris was US$546.7 million (though news reports suggest US$672.3 million) for 6.66 million shares.

The landmark decision was destined to put the Bank on a specific historical path – into becoming a more fully North American bank. The move was also historically fitting: the Bank of Montreal was the first Canadian bank to establish operations in Chicago, opening an agency in 1861. A founding member of the Chicago Clearing House Association in 1865, the Bank was closely associated with the development of the fur and grain trades across the Great Lakes. The banking markets of the Midwestern United States would increase the scope and reach of the Bank’s operations dramatically. As Bill Mulholland told US Banker in June of that year, “Let me suggest to you a great pipe running from north to south through which flows $106 billion in trade a year, total volume and an undetermined amount of transactional items. We have a large apparatus at one end of the pipe … The economic activity between the two countries is so enormous that it is obvious logic to get yourself on both ends of the pipe.”

One of the more remarkable elements of the first chapters of the BMO-Harris story was the fact that for a number of years, the Harris continued to have its own board and was managed as a self-sufficient organization. “We do not contemplate any significant changes in the Harris management structure or personnel,” Mulholland reassured at the signing. By the 1990s and 2000s, the process of becoming one bank had begun, and the emergence of a single strategy had emerged.

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