Calming Acquired Customers

Communication Is Rx for New-Bank Jitters

When Sterling Bankshares acquired two failed Massachusetts banks in only eight days, their customers' reactions startled John Warren, Sterling's president and CEO.

"I didn't understand how traumatic it was for the customer," Mr. Warren said. "His stomach ties up in a knot; he can't get hold of anybody.

"It's a very difficult time."

Such distress is increasingly common as mergers, acquisitions, and consolidations multiply.

Customers are confused and frightened by the changes, whether they arise from a takeover assisted by the Federal Deposit Insurance Corp., as in Sterling's case, or the Resolution Trust Corp., or from a negotiated merger between banks that are not failing.

Legalese Isn't Enough

To minimize customer confusion and fear, experts say, banks should present timely, honest, easily digestible information about what's happening.

Though almost all banks meet regulatory obligations to inform customers of acquisition activity, all too often banks neglect to address customers' real concerns.

Sending out statement stuffers, direct mail brochures, and letters full of regulatory legalese leaves customers believing that the bank is maintaining a chilling secrecy about the real issues: safety and accessibility.

A Need for Reassurance

"Security and access to accounts is paramount in customers' minds," said Lee Irving, senior vice president and treasurer of Albany-based KeyCorp.

"They need reassurance. You really need to communicate with the public about the safety of their deposits; you don't want to promote behavior that is illogical."

Making Use of Employees

For example, Mr. Irving said, banks should send press releases to local television and radio stations and newspapers reassuring customers that their money is safe.

Tellers, customer-service representatives, and other branch personnel should also make this message clear.

"You need to get information out to employees as swiftly as possible," said Richard Anderson, executive vice president of G.S. Schwartz, a New York-based public relations agency that has advised many banks and financial institutions in merger and takeover situations.

Rallying the Troops

"You cannot have people in the dark," he added. "You don't want the person behind the teller window saying, |I don't know what's going on.'"

To prepare employees, distribute a concise question-and-answer sheet that addresses the issues you expect may arise, said KeyCorp's Mr. Irving.

As an alternative, teams of employees from both acquiring and acquired institution can work together to develop a relaxed yet knowledgeable company culture.

When Sterling Bankshares took over Woburn Five-Cent Savings Bank, most of Woburn's tellers and customer-service representatives kept their jobs.

"I had 30 of my staff working with the staff of the closed bank to talk about |our' company," Mr. Warren said.

Also, Sterling created an advertising campaign that featured Woburn's tellers.

"It was a reassurance campaign," Mr. Warren said.

"Some customers thought they wouldn't recognize anybody at the local bank after the takeover."

Bridging the Gap

Other steps recommended by these experts:

* A telephone number customers can use to ask questions about the takeover or merger.

* Personalized mailings featuring a welcoming letter from the president of the acquiring institution.

* Personal contact with key customers, shortly after a takeover is announced.

* Group meetings with customers, to hear and answer their questions.

"We sent out numerous mailings to keep our customers plugged in," Mr. Warren said. "We announced the changes -- like when we converted the computer systems -- and acknowledged that the changes wouldn't be without some pain."

Signs of Change

After Sterling Bankshares acquired the two failed banks in Massachusetts, it replaced the old signs with new Sterling signs, Mr. Warren said.

"There was a couple who had experienced bank failure during the 1930s and came in to the branch to make sure their money was safe," he said.

"They wanted to hear that everything was O.K. The customer sees a different sign over the door and has to come in and feel comfortable again."

Ms. Rosenberg is a freelance reporter based in Ardsley, N.Y.

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