Too Many Branches? Bans on Rise in Illinois: Chicago-Area Officials Hamper Growth Plans of Wamu, LaSalle

By Jackson, Ben | American Banker, January 13, 2004 | Go to article overview

Too Many Branches? Bans on Rise in Illinois: Chicago-Area Officials Hamper Growth Plans of Wamu, LaSalle


Jackson, Ben, American Banker


Battle lines have been drawn in half a dozen Chicago suburbs between banks looking to start branches and local governments that do not want them.

By the end of next year a number of regional, community, and even money-center banks plan to open as many as 400 branches in the Chicago area, which is regarded as one of the nation's most attractive retail banking markets.

But Washington Mutual Inc., LaSalle Bank, and others have found some local governments less than accommodating to their branching plans. Some governments have passed ordinances to prevent nonretail businesses from setting up in central business districts, while others have adopted informal policies against new branches.

Government officials have three objections to bank branches in central business districts: They say their communities have enough banks and prefer that available retail space be reserved for shops and restaurants; that unlike those stores and restaurants, bank branches generate little in sales tax revenue; and that industry consolidation could stick them with empty branches that are too costly to convert to other uses.

Batavia, for example, has put a six-month ban on new branches in its central business district while it reexamines its zoning codes and the town's business mix. Richard Smeaton, the city planner and zoning officer, said that by next fall Batavia will have 12 branches, but only two on its east side.

"We're not antibank," Mr. Smeaton said. "We have areas we'd welcome a new bank in."

Algonquin, northwest of Chicago, adopted an informal policy of interpreting its zoning code strictly to keep out bank branches after five new ones were built along one road in the town last year, said William Ganek, the village manager.

"The banks' goal is to come in and make money," Mr. Ganek said. "We have to think of the bigger picture for the community."

Banks could elbow out other business looking to get into the business district by paying premiums for real estate that retailers might otherwise buy, Mr. Ganek said. The village knows that banks are necessary, but at the same time it recognizes that its residents need other services.

Gerrie Smith, the executive vice president of retail banking for the $62 billion-asset LaSalle Bank, said there are ways to work with the communities. She said that in the third quarter, when the Chicago unit of ABN Amro Holding NV proposed opening a new branch in Lake in the Hills, the town council said it did not want another bank in town. The council relented after LaSalle was able to show that it had a number of account holders in town. …

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