JPMorgan paid $1.9 billion for the distressed commercial banking franchise in an overnight fire sale orchestrated by the Federal Deposit Insurance Corporation. The combined bank will hold $800 billion of US customer deposits, making it the largest depository institution in the country.

The acquisition also expands Chase's consumer branch network into the attractive states of California, Florida and Washington State and creates the nation's second-largest branch network - with locations reaching 42% of the US population.

The larger branch footprint will allow the company to further extend and grow in commercial banking, business banking, credit card, consumer lending and wealth management.

JPMorgan chairman and CEO Jamie Dimon says: "This deal makes excellent strategic sense for our company and our shareholders."

Dimon is an old hand at bank integration projects, having orchestrated a series of mergers and acquisitions at Bank One, prior to its take-over by JPMorgan Chase in 2003.

He says the bank will incur pretax merger costs of approximately $1.5 billion while achieving annual pretax cost savings of approximately $1.5 billion by 2010, net of significant investments in the business.

Chase expects to convert Washington Mutual's consumer banking, home lending and credit card businesses to the Chase brand and technology platforms over the next two years. Dimon says Chase and Washington Mutual customers should be able to access the combined network of 14,000 ATMs without fees in the coming months.