The megamergers that would create Citigroup and the new BankAmerica
After all, consumers long ago thumbed their noses at one-stop shopping
This industry consolidation, therefore, raises several fundamental
Is big better?
Can big be managed?
Are smaller banks marginalized by this activity?
Despite its dramatic consolidation, the U.S. banking industry has not
The benefits of scale and scope have been observed in individual
Size is necessary to overcome ever-larger spending requirements for
Benefits will emerge from cross-selling more products.
Simple operating leverage can result from spreading corporate overhead
To date, the benefits of size have been undone by the complexity of
The primary value of bigness depends on the bank's position with respect
A second size hurdle will develop if the newly created financial groups
Finally, bigger companies with higher price-to-book ratios can buy
The task now is to translate high-level statements of strategic intent
These new mega-firms will also need to be managed significantly
Recognize that distinct businesses need to be benchmarked against
Ruthlessly track market standing and cost positions in each competitive
Explicitly track cross-subsidization and cost-sharing among business
Though it is late in the game, banks worried about their size must
What businesses am I in and do I have needed market position/scale in
What needs to be rationalized in my portfolio? What needs to be
Where do I need to upgrade or add new capabilities?
What can I do to communicate my distinctiveness?
We say that there are three focused, strategic end points in this
Focus on and specialize in specific customer segments.
Focus on the distribution or "retailing" of products and services.
Specialize and build volume and scale in a single business-become a