Big Mergers Can Be Costly for Bank Trade Associations
Fox, Justin, American Banker
At the American Bankers Association, the blockbuster Chase Manhattan-Chemical merger is more than just cause for oohs, aahs, and discussions about the future of the banking industry.
It's also a $128,750 hit to the trade group's bottom line.
The merger will also be costly for Bankers Roundtable and the Consumer Bankers Association.
The reason: All three groups' dues are structured so that an immense bank pays little or nothing more than a simply huge bank. At the ABA, a bank with assets of more than $50 billion - be it $51 billion or $297 billion - pays dues of $128,750.
With the merger of behemoths Chase and Chemical, the net effect for the trade groups is the same as losing a member - and a big one, at that.
As a result, this year's wave of megamergers has been bad news for trade associations.
"Obviously it's going to cost us several hundreds of thousands of dollars," said Dick Foss, director of membership at the ABA. The ABA's total budget is $67 million.
At Bankers Roundtable, revenue loss from the mergers announced so far this year will be proportionally much bigger - $300,000 out of a budget of $3 million, executive director Anthony T. Cluff said.
The Consumer Bankers Association's loss will be something more than $100,000, out of a budget of $4 million, said Daniel Buser, the group's vice president for development.
The Independent Bankers Association of America and America's Community Bankers have not been affected by this year's supermergers, but they, too, have seen membership shrink as mergers and acquisitions of all sizes deplete the industry's ranks.
"The percentage decrease hits the ABA and Bankers Roundtable with much greater impact than we are hit," said Kenneth Guenther, executive vice president of the IBAA, where dues top out at $5,000 for the biggest members. "But the trend toward consolidation has affected community banks as well."
ACB, the trade association for thrifts, has not been plagued by members merging. …