Derivatives at Banc One (1994)
Posted: 27 Jun 1998
SUBJECT AREAS: Commercial banking, financial derivatives, duration, interest rate swaps, regulation and deregulation, information technology.
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Banc One Corporation, a bank holding company headquartered in Columbus, Ohio, has been one of the great success stories of US banking. With roots as a local Columbus bank, twenty-five years of acquisition-driven growth have produced a "super-regional" powerhouse operating, at the end of 1993, in 13 states, with assets of $79.9 billion, an earnings record the envy of the industry, and average annual stock appreciation since 1968 of 16.5%. Growth has been matched by performance, with consistently high returns on assets and equity and an ongoing record of technology-based innovation.
We use Banc One's experience with interest rate swaps to illustrate the management of interest rate risk at a commercial bank. The case also serves as a vehicle for examining the current state of commercial banking in the US, the use and reporting of derivative positions, and the role of information technology in banking management and strategy.
JEL Classification: G13, G21
Suggested Citation: Suggested Citation