Citicorp Sets Connecticut Entry with 8 Branches
Citicorp is planning to expand to Connecticut next year with the opening of eight to 10 branches in Fairfield County, one of the nation's most prosperous regions, a company official confirmed Tuesday.
The disclosure comes on the heels of Chase Manhattan Corp.'s acquisition this month to Citytrust and Mechanics and Farmers Savings Bank, two insolvent companies in Bridgeport, Conn., with 67 branches.
Several other New York banks, including Bank of New York Co., Republic New York Corp., and Chemical Banking Corp., also are said to be considering plans to expand to Connecticut.
Beginning Feb. 1, Connecticut will permit banks from New York and other states with reciprocal rights to open branches. Out-of-state banks have been allowed to buy Connecticut banks outright since 1990.
Bank Purchases on Hold
Citicorp chairman John S. Reed said in a recent interview with the Greenwich Time that the nation's largest bank plans to be "one of the players" in southwestern Connecticut, which is part of the metro New York City region. But he added that Citicorp cannot buy a healthy or failed bank because of the risk of adding to its already burdensome credit problems. Regulators, too, he hinted, would not allow a purchase.
"We've got our own problems, which make it very difficult for us to buy other banks that have problems," he told his hometown newspaper.
Citicorp currently has 230 branches in New York City and its immediate surroundings, the bank spokeswoman said. A task force headed by Marvin Cooper, a retail banking director in charge of upper Manhattan and Westchester County, is coordinating the bank's Connecticut expansion.
Through its credit card network as well as its loan production and mortgage offices, Citicorp already has banking relationships with 23.1% of households in Fairfield County, according to Payment Systems Inc. It is trailed among New York banks by Chase, with 8.7% penetration; Chemical with 4.66%, and Manufacturers Hanover with 3.34%.
Locations Under Study
Citicorp has not yet decided where to locate the sites or what combination of branches or drive-in facilities will be used, the spokeswoman said.
Chase has made a quick start on its Connecticut incursion, sending in a team of 150 employees to convert its new branches and mailing out glossy brochures to depositors and customers. Fifty-two of Chase's 67 new Connecticut branches are located in Fairfield County.
A spokesman for Republic confirmed that the bank wants to expand its retail presence, but declined to elaborate.
"We are in an acquisitive mode, primarily with thrifts, in the New York City and surrounding area," the spokesman said.
Spokesmen for Chemical and Bank of New York were unavailable for comment.
BankAmerica Corp., which made an unsuccessful bid for the failed Bank of New England Corp. and its Connecticut and Massachusetts franchises, is also said to be interested in New England financial institutions. A BankAmerica spokesman said the company looks "selectively at opportunities that arise," but would not comment on any specific plans for Connecticut.
Several Connecticut bank and thrift stocks have rallied on acquisition rumors in recent weeks, said Douglas C. Dreyer, a broker who specializes in bank stocks at Advest, a Connecticut brokerage firm. These include Gateway Financial in Norwalk and Northeast Bancorp in Stanford. However, Mr. Dreyer attributes much of the action to "wishful thinking."
Few people in the beleaguered New England region expect the New York banks to begin a price war by raising deposit rates and lowering loan fees.
"But there's a hope that once Chase gets its deals in place, they might ease the credit crunch," Mr. Dreyer said.
Local banks and thrifts, meanwhile, are girding for competition. And the stronger ones are hinting that they, too, plan to expand.
Robert J. Narkis, chairman of Centerbank, a Waterbury-based savings bank that also bid on Citytrust and Mechanics & Farmers, said in a statement that his company "looks forward to additional moves." Centerbank has $1.7 billion in assets.