ABN Amro Unit Challenging First Chicago on Two Fronts

Officials at ABN Amro North America Inc. say they have an aggressive strategy to overtake First Chicago NBD Corp. as the No. 1 retail bank here while cutting into that company's one-third share of middle- market lending.

The $50 billion-asset unit of the Dutch banking giant ABN Amro Holding used to say it would acquire only in markets visible from the top of the Sears Tower. Now, executives say it's necessary to cross into other states to compete with goliaths such as $122 billion-asset First Chicago NBD.

"We think we have a shot," said Scott Heitmann, president and chief executive of the community bank group at LaSalle National Corp., ABN Amro's Chicago banking subsidiary. "It's an ambitious two-pronged strategy."

ABN Amro is a distant second in retail market share here, capturing 5.7% of the primary banking relationships to First Chicago NBD's 20%, according to the market audit firm Claritas Inc. (The relationships include traditional banking products, such as checking and savings accounts.)

While there's room to grow in retail, ABN Amro officials concede middle- market lending will be a harder business to dominate, as First Chicago NBD controls 33% of that market here. ABN Amro says it is third with 19%.

"Let's put it this way," Mr. Heitmann said. "It's an ambitious size and market share" LaSalle must attain to surpass its rival.

But it has the backing of its $340 billion-asset parent, which has the most U.S. assets of any foreign bank except Mitsubishi Bank and Bank of Tokyo, which are merging.

And it can always use acquisitions to bulk up quickly.

There are hundreds of small thrifts and banks in the Chicago area, although Mr. Heitmann said his company is rarely interested in institutions under $500 million in assets.

And analysts believe several out-of-state regionals with minimal presence here, such as First Bank System and Comerica Inc., are reevaluating their strategy and may be willing to sell. First Bank and Comercia have less than 1% of Chicago deposits.

Mr. Heitmann said smaller acquisitions could be a possibility if they establish a presence in a market or serve as a fill-in where LaSalle doesn't have much market share. LaSalle is well positioned in the city, for example, but not in the affluent northwest suburbs.

However, observers say that ABN Amro's ambitions are making small thrifts more expensive. "Statements like (ABN Amro's) have the potential of driving the market for bank stocks to be very strong," said Michael Sammon, senior vice president of banking for Howe Barnes Investments Inc. "Statements like that fuel the fire in Chicago."

Still, there are attractive plums to be picked, such as St. Paul Bancorp, a $4 billion-asset Chicago thrift with 50 branches.

ABN Amro officials say they're looking regionally and not just in Chicago for potential acquisitions. Mr. Sammon said Old Kent Financial Corp., a $12 billion-asset Grand Rapids, Mich., company with about $1.6 billion in Chicago deposits, would be a good fit with ABN Amro.

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