Magazine article American Banker

Comment: Would You Aid Rival in Need?

Magazine article American Banker

Comment: Would You Aid Rival in Need?

Article excerpt

When serious trouble strikes, you find out who your real friends are.

This was brought home to me recently when I attended the annual officers forum of a community bank that had one of its branches wiped out by a fire last year.

The recovery work was enormous. For instance, one bank officer was in a police car all night, guarding the safe deposit boxes. Owners of the safe deposit boxes were panicked about the prospect of losing their wealth and such priceless possessions as a 92-year-old wedding ring. One depositor was incensed -- he had recently gone through a divorce and had a large amount of unrecorded cash in his box.

But it was the competition's response that interested me most.

One rival's chief executive called right away, offering to help get the destroyed branch back on its feet. Another, with an office across the street from the burned-out branch, offered desk space so the bank could keep operating and serving its customers.

A third bank was not so neighborly. It had representatives visit the stricken bank's business customers to try to win their accounts. This was bank competition at its worst.

Similar cases have brought out the best and less than the best of competitors.

A notable example is when a major Philadelphia bank got in hot water with regulators because of a bad bet on long-term federal bonds.

Most of the banks that the Philly bank regularly traded federal funds with walked away. But a Pittsburgh bank stated, "We were friends when they were in good shape, and we will remain loyal now. …

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