influential customers have been getting the blues. Efficiency is a recurring theme in bank mergers. The partners often boast that staff reductions and cuts in other expenses will enhance profitability. Though such austerities appeal to Wall Street, they are not sitting well with some bank customers. And that could spell trouble for overeager cost cutters, who risk driving clients away as they drive costs down. To be sure, post-merger customer retention long has been a challenge for banks. But the problem may worsen as consolidation accelerates and nonbank competitors flex their muscles. At the annual Treasury Management Association conference in Boston, several speakers said they are worried about losing customers as bank account managers depart. "Service declines when these mergers take place," said Barron H. Putnam, the president of Lace Financial Corp., a Frederick, Md.-based company that rates banks and thrifts. Corporations also face potentially unwanted changes to bank computer systems, Mr. Putnam said. Such changes can drive cash management customers into the arms of competitors, he said. Jeanne L. Angelo-Pardo, the treasurer at NetManage Inc., Cupertino, Calif., said she changed cash managers because the company's former bank failed to build promised foreign exchange and cash management capabilities. Ms. Angelo-Pardo recently switched NetManage's cash management account to First Interstate Bank. And she might face another decision of that kind if First Bank Systems or Wells Fargo & Co. wins the battle to buy First Interstate. Though Ms. Angelo-Pardo said she is not actively looking for a fallback cash manager, she said she would not hesitate to look elsewhere if she became dissatisfied with the merged entity that will contain First Interstate. Some bankers at the conference said they were sympathetic to such concerns. Gretchen E. Phillips, a vice president at Huntington Treasury Management Co., agreed that banks face a big challenge in merging disparate computer systems from different states. That, she said, is a concern for geographically dispersed corporate clients, which may do business with several subsidiaries of a newly merged bank and want the same format and quality of service at each locale. Nonetheless, Ms. Phillips said, the bank merger frenzy does create value for corporate clients, especially those with far-flung operations. "A lot of corporations feel consolidation poses an opportunity for them," said Ms. Phillips, since "nirvana for many companies is having one nationwide account." What is more, she said, economies of scale and product development resources unlocked by mergers will speed the introduction of valuable electronic capabilities. For example, Ms. Phillips said, customers often complain about bank- supplied credit and debit records having incomplete descriptions and routing information. Clients can spend days reconciling these reports, she said. As image-based information systems proliferate, however, corporate customers can retrieve images of requested credit memos immediately. Ms. Phillips added that concerns of the sort voiced at the Treasury Management Association conference don't exclusively hinge on consolidation. Five years ago, she said, corporate clients complained that banks were cutting back service to deal with mounting loan defaults. "Now, the (service) questions concern consolidation," she said. "It's just the topic du jour." Mr. Putnam of Lace Financial added that banking consolidation is necessary, since too many banks are chasing too few clients.

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