other landscape-altering transactions, there has been lots of speculation about the impact of consolidation on smaller banks, on customers, on employees and their families, and on communities. Without addressing the relative merits of the Chemical-Chase transaction (which affects my local market), or the accompanying opportunities and issues that will have to be addressed by the combined management team, I believe there are several marketplace realities that will flow naturally from this and other megamergers. And this fallout represents an opportunity for midsize banking institutions that are focused and nimble enough to take advantage of them. First, there's the "homeless problem," and I am not referring to the unfortunate people in our society who do not have a place to call home. I mean the many business customers who get lost in the inevitable shuffle of bank consolidation. Providing a safe haven for these disenfranchised and often underserved customers is a major strategic opportunity for midsize banks that can offer sophisticated products in combination with good personal service. Since Chemical and Chase appear to have a shared focus and orientation, the resulting "homeless problem" may be less than in some of the other megamergers. But even in a best-case scenario, the upheaval will be nothing short of enormous, as an examination of the impact on New York City bears out. The merger is expected to result in the loss of at least 4,000 jobs in New York and the closing of approximately 100 branch offices. The job loss figure is fully one-third of the planned total worldwide staff reduction, and comes on top of a six-year trend in the industry that has cost the city 50,000 jobs to date, according to the Bureau of Labor Statistics. Some communities and the businesses they depend on will inevitably be served less well than before. It's hard to argue against the benefits of downsizing for shareholders or for efficiency ratios - it's a rare bank that hasn't pursued this strategy in the early 1990s. Furthermore, merger and acquisition activity in our industry is most often driven by the perceived ability to eliminate redundancies in the cost structure of the combined institution. But the sheer size of this consolidation will create never-before-seen opportunities for midsize players in our nation's largest banking market. While Chemical has proven experience in managing a large merger through its success with Manufacturers Hanover, it will take a minimum of six months for the deal to be approved, and another six to 12 months for the real benefits to become apparent. In the meantime, many customers will likely be confused and inconvenienced as systems are merged, policies reevaluated, branches closed, and people are let go, are reassigned, or leave the company. If experience with other large-scale mergers is a guide, this process will have its greatest impact on business customers, since they tend to rely more heavily than retail customers on daily interaction with an efficient service from branch or corporate lending employees. This is particularly true since the downsizing comes on top of what some analysts suggest is already a 20% annual employee turnover at the largest banks. Equally important, business customers rely on existing relationships with specific bank employees to resolve problems and get prompt answers to requests. That's where the most potent opportunity lies for midsize banks to take advantage of the Chemical-Chase transaction, and other past and future mergers. The real issue is the diminishing quality of service that a consolidating industry is providing to small and midsize companies. A recent survey of the senior executives at smaller companies by Opinion Research Corp. showed that only 38% gave their banks high marks as a trusted source of financial advice - a bad indication of the value they are getting from their banking relationship. Companies with $5 million to $15 million in annual sales were the least satisfied with the attention they receive from their primary bank. There is a great opportunity for midsize banks to seize on this dissatisfaction among smaller companies. This begins with delivering effectively on the basics. Middle-market business customers typically define service to include offering the right products to fit their needs, addressing problems promptly while providing solutions (and let's not forget capital) on a timely basis, and maintaining the constant attention of experienced bankers. The smaller corporate customers of banks in the throes of large mergers aren't likely to get the basics consistently, let alone value-added services and personal attention. An institution like mine, in the $1 billion to $5 billion asset range, can grow at an accelerated pace by picking off a few of the "homeless" every month while preserving and expanding existing relationships. If we pick these new customers wisely, we can emerge with a loan portfolio that is more diversified (therefore less risky), and provides higher earnings with better credit quality. Another major opportunity for midsize banks is attracting talented people from consolidating institutions. While merging banks want to keep their best people and shed the underperformers, the reality is often quite different. In merger politics, the management at the acquiree is less likely to emerge with a job. The most talented people are the most mobile, and a good many will shop the job market during the 12 to 18 months of uncertainty that follows a merger announcement. This talent pool includes management at other banks in the area who become anxious about their own situations. Depending on the market, the job opportunities may be few. In the case of Chemical-Chase, there will be more talented management people rendered "homeless" than the New York market can absorb. Midsize banks that cast a wide net and move quickly to develop rewarding career opportunities and attractive, incentive-based compensation packages can get the kind of talent that will help make their growth plans a reality. The Chemical-Chase merger is just the latest evidence of a long-term trend: large banks seeking survival through global competitiveness and improved efficiency ratios. Midsize institutions will survive and prosper, not by trying to emulate the efficiency ratios of their larger brethren, but by aggressively pursuing a focused strategy in niche businesses and geographic markets. Their strategies can be significantly enhanced by providing "homeless shelters" for the business customers and bank personnel who are lost in the shuffle of consolidation. Mr. Venetis is president and chief executive officer of Atlantic Bank of New York.

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