New Bank America Ushers in Nationwide Banking

By Gillam, Carey | American Banker, September 30, 1998 | Go to article overview

New Bank America Ushers in Nationwide Banking


Gillam, Carey, American Banker


When NationsBank and BankAmerica close their $43 billion merger today, they will do more than create another megabank. They will form a new class of financial services giant: the nationwide bank.

The merged concern, to be known as BankAmerica Corp., will have 4,800 branches in 22 states, making it the first banking company with a truly coast-to-coast branch network. Until now, banks have relied on technology and nonbanking outposts to pursue their national ambitions and have limited their branch networks to select regions of the country.

As a result, all eyes are on BankAmerica as it pieces together its sprawling multistate operation. Bankers, analysts, and others are eager to see whether this next step in the banking industry's evolution-from regional bank to superregional to nationwide player-is viable.

"It is a test that has to be run several times before we see just how fabulous it can be," Mike ter Maat,a senior economist at the American Bankers Association, said. "I am optimistic that it will be a very,very successful trend."

Executives of the new BankAmerica say that size and breadth will give them a slew of competitive advantages, from diversified revenue streams to operational efficiencies. By offering "a commonality of product and services" nationwide, they say, BankAmerica can appeal to an increasingly mobile population.

The effort, however, will not be without challenges.

With its top executives split between Charlotte, N.C., and San Francisco, the new company will have to meld Southern-style management with West Coast banking culture.

It will have to create a unified brand identity for a sprawling retail territory. And it will have to make good on promises to cut costs while offering more value to customers.

"Given their size, they could be more volatile rather than more successful," said Charles B. Wendel of Financial Institutions Consulting in New York. "It comes down to execution, how they make it work."

Being nationwide "differentiates them from everybody else," he added. "But does it lead directly to increased profitability? Of course not."

Executives from NationsBank and BankAmerica voice little doubt that the enterprise will succeed.

"We'll be coast-to-coast and in every major metropolitan area," said James H. Hance Jr., vice chairman and chief financial officer of Charlotte, N.C.-based NationsBank Corp. and the new bank's CFO.

"It translates into higher returns," he said. "It translates into lower prices for customers. It translates into a sounder institution and a sounder company."

Certainly, the new BankAmerica will be big. With assets of $572 billion, it will serve 29 million households and two million businesses. It will claim the dominant share of deposits in some 13 major metropolitan areas, and control 8.1% of U.S. deposits.

The new bank will also be the No. 1 player in a broad range of businesses, from consumer lending to mortgage servicing to corporate cash management. And it will have nearly 2,000 more locations than its closest branch banking competitor, the combined Norwest-Wells Fargo.

According to Mr. Hance, the ability to offer a consistent customer experience from Florida to California is a key benefit of BankAmerica's nationwide branch network. Not only will it appeal to convenience-hungry consumers, but it will give incentives to large retailers and other multistate businesses to bank with the new BankAmerica, Mr. Hance said.

In seeking to make its brand well-known, the company is hoping to benefit from considerable economies of scale in advertising. In other words, advertising dollars could go further when they are applied to national television buys rather than to regional efforts. …

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