Last week, BankAmerica Corp. and NationsBank Corp. announced a $62 billion merger that, if approved, would create the second-largest bank in the country. Only a week before, Citicorp and Travelers Group Inc. announced a planned merger that would be the largest in U.S. history. Mergers have proven to be a mixed bag when it comes to expanding opportunities for some businesses, so the Business Journal asks:
Are you concerned about the banking mergers, and why?
Howard D. Sadowsky
Executive Vice President and Regional Manager
Julien J. Studley Inc.
Sure, I’m concerned that it has been happening over the years and not just in banking. We are slowly eliminating the competition, and therefore it is going to be the big conglomerates controlling the fees. It will be harder for new ideas to come through. The consumer is going to be the big loser. Small-business owners are not going to have the ability to operate cheaply or effectively. The single guy will be virtually eliminated. We are all going to miss out.
You really can’t stop the mergers from going forward. My concern is that so many people get laid off. The mergers are completely insensitive to people’s lives. Not only are the employees affected, but the consumer loses out as well.
Senior Vice President
La Salle Partners Inc.
Yes, of course when there are mergers of this magnitude, you always wonder what the future will hold. I wonder with Bank of America how much they will leave in California and what will be consolidated. I also wonder where it leaves the human resource base. On a consumer basis, larger is not always better. The personalized service is always lost.
Investment Development Services
I am concerned for friends who are employed in the banking industry. Usually these types of mergers beget layoffs. Most look for cost efficiency. So that usually means people losing their jobs. Financially, it may lead to more efficient costs of capital. It may make lending cheaper for us.
Greens Inc. Printers and Lithographers
My first gut reaction is yes, because it limits competition. The interesting thing here is that I have mutual funds which are skyrocketing because of the mergers. I’m financially doing well. But as a business owner and consumer, it is better to have competition. Industry does better and consumers do better with competition. It is also a concern that so many people are getting laid off; I am concerned for those employees.
Playa Capital Corp.
I happen to own a lot of Bank of America stock, so in one respect it is good news. There is a potential for great improvement. This mega-merger makes it a national powerhouse, which is something that is long overdue. On a personal basis, I have some concerns about this continual institutionalization of American service businesses. Bigger can be better, but it can also become more impersonal. They have to guard against losing personal touch with their customers banking is a very personal business.