“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.
|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|