Megamergers Tempt Competitors to Raid Customers
It's become something of a trend: A bank megamerger is announced, and rivals unleash advertisements urging business and retail customers to jump ship.
BankAmerica Corp.s' agreement to join forces with Security Pacific Corp. is a case in point.
Since the merger announcement two months ago, Wells Fargo & Co., BankAmerica's crosstown rival in San Francisco, has run a series of newspaper ads urging business clients to switch banks.
"Logic tells you it is an opportunity to acquire new customers," said senior vice president Brian L. Billings, Wells' marketing chief. His bank is the biggest Golden State rival of BankAmerica and Los Angeles-based Security Pacific.
Others that have taken similar tacks include Great Western Financial Corp., Beverly Hills, Calif., and Washington Mutual Savings Bank, Seattle. (Both BankAmerica and Security Pacific have major bank subsidiaries in Washington State.)
Marketing experts are counting on the perception that mergers confuse customers. When a merger takes place, they note, service levels sometimes slip and operations become fouled up.
What's more, customers of one bank may have had a bad experience with the merger partner, which could make them ripe for the picking.
"It's the disruption of existing banking relationships that creates an opportunity," said Patricia P. Hudson, a consultant at Porges Marketing Inc., San Francisco.
Wells' newspapers ads feature its familiar stagecoach with the door wide open to receive passengers. "If your bank is leaving you behind, climb aboard Wells Fargo," the headline reads.
Wells created the ad three years ago, running it on a spot basis in markets where bank combinations had taken place.
But there are pitfalls in such advertising. Wells has itself been an active acquirer. That could be why the bank plays the merger-bashing theme in a relatively soft key.
Keeping Message Fuzzy
The ad, for example, doesn't mention rivals by name or use the word merger. "We do try to take the high road," said Mr. Billings, Wells marketing chief.
In Washington, tiny Enterprise Bank, near Seattle, is taking a much harder line against the BankAmerica-Security Pacific merger.
"Is this merger as good for you as it is for them?" asked a full-page ad last month in a local business journal. "Familiar faces will disappear.... Confusion is inevitable.... Chances for problems and errors are high. ... Decision-making will become even more centralized."
"We've had a fabulous response," said Thomas E. Cleveland, chairman and chief executive at Enterprise, a one-branch business bank with $68 million in assets.
Mr. Cleveland said six or seven businesses had moved deposits to his bank from Security Pacific or Seafirst, BankAmerica's Washington unit.
Seafirst officials acknowledged that such appeals can be effective. But they claimed their best response is to stay focused on their own marketing messages. "The moment we start getting defensive, we lose sight of what we do well and get murdered," said senior vice president Jack W. David, Seafirst's marketing chief.