The Two Faces of Bank Mergers

Corporate customers should look beyond the rhetoric of consolidation's advantages.

“CFOs absolutely have reason to be concerned,” adds Kenneth Thomas, who lectures in finance at the University of Pennsylvania’s Wharton School, and who calls himself “a big fan of diversification” in banking relationships, and especially in loan portfolios. He strongly advises CFOs not to fall for the “range of new services” pitch that merged banks offer as a postmerger benefit to customers. “I would be very cautious about putting all my banking relationships in one basket, even though the banks want you to do that. In the final analysis, diversification always wins ,” he says, and may give companies a better bargaining position on rates.

“Even if you’re a big company, you’re just another brick in the wall to the ‘League of Trillionaires,’” says Thomas, referring to the merged BofA and JPMorgan entities, along with Citigroup. “It is increasingly difficult to go to the top person in your bank. If you were a Boston customer of Fleet Bank, at least you knew that the president lived in the same city as you.”

Kris Frieswick is a senior writer at CFO.

Blending the Banks
U.S. banking’s biggest deals of 2003 and 2004.
Deal size
($ millions)
Date announced Buyer Seller
57,402 1/14/04 JPMorgan Chase Bank One
47,833 10/27/03 Bank of America FleetBoston Financial
6,749 4/2/03 First Data Concord EFS
5,913 1/23/04 Regions Financial Union Planters
3,030 1/23/03 BB&T First Virginia Banks
2,126 6/27/03 New York Community Bancorp Roslyn Bancorp
1,415 11/25/03 Independence Bancorp Staten Island Bancorp
909 1/26/04 Sovereign Bancorp Seacoast Financial Services
692 12/16/03 North Fork Bancorp Trust Co. of New Jersey
681 8/21/03 PNC Financial Services Group United National Bancorp
671 5/19/03 Wells Fargo Pacific Northwest Bancorp
615 12/22/03 Provident Financial Services First Sentinel Bancorp
Source: Mergerstat


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