Magazine article American Banker

Chemical to Its Rivals: No Sale; Merged Bank Says It Won't Peddle Surplus Branches

Magazine article American Banker

Chemical to Its Rivals: No Sale; Merged Bank Says It Won't Peddle Surplus Branches

Article excerpt

If Citicorp and Chase Manhattan Corp. expect to land some of the 80 branches Chemical Banking Corp. plans to close as a result of their merger, they are mistaken.

Two senior consumer banking executives at Chemical said last week they would rather shutter branches than sell them to the enemy.

John Stack, senior vice president in charnge of Chemical's New York branch system, said he would keep an unnamed number of branches dark "to keep competition away."

Strategy or Ploy?

Whether that is a heartfelt strategy or a negotiating stance is still unclear. But it should give Chemical's rivals pause.

Donald Boudreau, an executive vice president in charge of regional banking at Chase, said in a recent interview that his officers were scouting Chemical branch locations for possible acquisition.

William Ahearn, a spokesman for Citicorp, said the institution routinely looks at potential branch sites. But he played down the Chemical strategy.

"If there are Chemical and Manny Hanny branches somewhere, chances are there's a Citibank branch in between," Mr. Ahearn said. "We are certainly not salivating at the thought of moving into an old Chemical or Manny Hanny branch."

Chemical, which merged with Hanover on the holding company level at the end of December, does not expect to join the companies' flagship banks until the end of June.

They have said they expect to close 80 overlapping branches as a cost-saving measure over the next three years.

And Chemical president Walter V. Shipley recently said that the number of closed branches could rise even higher.

But a decision to turn out the branch lights rather than rather than subletting until leases run out is costly for the bank.

Chemical has to write off the closing costs as part of a restructuring charge, said Carole Berger, an analyst at C.J. Lawrence. …

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