Eye On The Competition
Bank Mergers May Effect Customer Satisfaction
NEW YORK.-An annual survey by the University of Michigan hinted that bank mergers may affect customer satisfaction, The American Banker reported.
"The pattern seems to hold-the ones that have merged do not seem to have improved" service, said Claes Fornell, who worked on the survey used to come up with the so-called American Customer Satisfaction Index Quarterly, the daily said.
For example Bank of America Corp.'s, which bought FleetBoston Financial Corp. in April, saw its score decline 2.7%.
JP Morgan Chase & Co., which bought Bank One Corp. of Chicago in July, didn't improve from last year, the survey added.
According to the survey, banks posted improvements in customer satisfaction until reaching a 10-year peak in 2003. In 2004 the industry kept the same level and didn't improve, The American Banker said citing the survey.
The results of the survey, however, were mixed as Wachovia Corp., which according to the survey improved its customer satisfaction, had bought SouthTrust Financial Corp. in November, the daily said.
Bank of America disagreed with the survey and said in a statement that customer satisfaction actually improved.
Hudson Plans Record Conversion
PARAMUS, N.J.-Hudson City Bancorp of Paramus, N.J. expects to raise $3.5 billion to $4.7 billion as it completes its conversion from private to a stock-traded company, The American Banker said. Hudson City, corporate bank of Hudson City Savings Bank, plans to sell the 68.5% stake that it owns to investors. It sold 47% of its shares in the first step of its conversion in July 1999 for $527 million.
Since then stock buybacks increased its ownership stake to current level. The amount raised is a record for a conversion of this type.
Longer Banking Hours Becoming a Trend
CARLSBAD, Calif.-Kennedy Thompson, chief executive of the $493-billion Wachovia Corp., announced it will keep some of its branches open until 7 p.m. on weekdays and to 4 p.m. on Saturday, joining other banks that have also extended hours, The American Banker reported.
"We studied it and we know our customers want it," Thompson said in an interview.
Commerce Bancorp Inc., of Cherry Hill, N.J. already keeps branches open seven days a week, some as late as midnight. Bank of America Corp. keeps some branches open until 7 p.m. in its hometown of Charlotte.
The changes indicate that opening longer hours will soon be more than just an innovation for advantage and become widespread, said Richard Hartnack, vice chairman and head of community banking at the $47-billion UnionBanCal Corp.
Cash America Plans to Add 85 Stores
FORT WORTH, Texas.-The Fort Worth provider of pawn and payday loans Cash America International Inc. will continue its fast expansion this year, The American Banker said.
Daniel Feehan, CEO of Cash America, said in a press release that his company plans to add 85 stores this year.
Cash America, the biggest U.S. pawn loan provider, had 839 stores at the end of last year.
Feehan said the company will use its own cash to expand as well as a $250 million loan.
Wamu May Be Bought in Five Years, Analyst
SEATTLE-The $308-billion Washington Mutual Inc. may be acquired within in five years as it may be attractive to banks such as HSBC Group and Citigroup Inc., The American Banker reported.
Thomas Monaco, analyst at Moors & Cabot Inc, said Wamu's branch network with locations in key growth markets makes it attractive, particularly for HSBC and also for Citigroup Inc.
"HSBC wants New York city for deposits and cost saves, Florida for private wealth, the Asian Community's bank of choice on the West Coast and a bit of Texas" to complement HSBC's Mexican franchise, The American Banker quoted Monaco as writing in an e-mail. Wamu did not comment on the analyst opinion, the daily said.
Asian American Banks Booming
LOS ANGELES-Thanks to lucrative Asian clients and Far East trade finance activities Asian American banks are flourishing, US Banker reported.
The three largest publicly held Chinese-American banks in the country-East West and Cathay Bank in Los Angeles, and United Commercial Bank of San Francisco -regularly outperform industry averages in ROE and percentage increase in earnings, US Banker said. All three produced 2004 earnings of between 20% to 31% above the prior year.
Recently, the smaller Korean-owned banks Hanmi Financial and Nara Bancorp have seen their share prices soar by 90% and 69% respectively, the magazine said.
"They've been phenomenal earnings stories," said Advest research analyst Lana Chan, who has followed the Asian-American banks for two years. "The outlook is that this will continue," she added to the US Banker.
Congress Likely to Pass Law to Protect Data
WASHINGTON-Following the publicity over the loss of data on 1.2 million Bank of America Corp. Congress may feel more pressure to act on an issue that bankers would rather leave to regulators, The American Banker said.
Floyd Stoner, executive director of congressional relations at the American Bankers Association, said that regulators should be the ones handling the issue, instead of legislators who moving to a quick fix.
Edmund Mierzwinski, a consumer advocate at the U.S. Public Interest Research Group, said regulators have waited too long and Congress needs to assure "a tough regulatory policy that protects information," The American Banker quoted him as saying.
Regulators, including the Federal Reserve Board, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and Office of Thrift Supervision have yet to issue final guidelines.
Regulators have so far recommended, but not required, that financial companies notify customers if personal information is lost or stolen, The American Banker said. If stolen data is "unlikely" to be misused, notification isn't necessary, it said.
Legislative proposals may build on California's notification law, which requires customers to be informed if data about them is endangered, the daily reported.
FDIC Payday Stance May Narrow Field Further
WASHINGTON-The Federal Deposit Insurance Corp. has issued new guidelines that could cut bank-funded payday loan volume by at least 25% and increase the cost of this business for depositories, The American Banker said.
Steve Bumann, senior vice president and finance officer at BankWest Inc. in South Dakota, said that when the bank started funding payday loans three years ago it knew "it was probably something we wouldn't be able to do forever."
The guidelines released March 2 by the FDIC would limit the number of months a customer can be in a payday loan to three per year. The FDIC also said it wants lenders to come up with a more "suitable" product to offer borrowers after the sixth pay loan.
Steve Trager, chairman and chief executive of Republic Bank and Trust Co. in Louisville which makes payday loans through Advance America and Ace Cash Express Corp., said that adding new products may bring in higher costs.