Anyone who follows the banking industry has heard the horror stories about banks that bought up other banks only to watch depositors take flight.
That should be no surprise for acquirers that cut rates on savings, increase rates on loans and service charges, raise the bar on minimum loan size, abandon popular services, and replace familiar forms and procedures.
Customers also like familiar faces, and they tend to see fewer of them after a merger.
Sometimes that is a result of firings; the buyer may try to justify a high price by severe cost cutting to reduce the dilution of earnings per share. But people may leave on their own volition because they no longer have any authority to make decisions.
"All the thinking is now done at headquarters," explained one officer of many years' standing who quit after her bank was acquired. "I became a clerk handling forms."
People also leave when they feel they can no longer do right by the customers they have served for years.
They used to handle requests, queries, and complaints themselves; now they are told that responses will flow from headquarters. When calls are not returned and requests are not answered, the customers blame them.
Employees also leave when told that they must become marketers - must make a certain number of calls per day to cross-sell new services, such as home equity loans.
Though cross-selling is a basic part of bank operations today, many employees are terrified of having to become salespeople who must meet sales quotas.
Finally, many employees fear they will be laid off after a merger, so they start looking for another job as soon as rumors of sale surface.
Borrowers, meanwhile, are alienated by being told their credit requests are too small or by losing the loan officers who knew them and could dig deeper than financial statements to make marginal requests bankable.
Some banks are learning how to treat acquired customers better; they are changing procedures, forms, and rates extremely slowly.
But they will keep losing acquired employees unless they make them feel like valued members of a new team, with secure jobs they can do with pride.
Good advice, therefore, from executives whose banks have been burned by the aftereffects of acquisitions is to go slow on changing procedures but fast on resolving changes in the employee structure.
If drastic steps are needed, they should be taken immediately, and employees should be assured that no further cuts will follow. That tells acquired employees that their new their leaders know a bank's No. 1 assets go out the door every evening.
