Bank of America Illinois says it is increasing its commercial lending 20% a year by blitzing individual markets.
The Chicago subsidiary of San Francisco-based BankAmerica Corp. held its latest two-day lending campaign last week, dispatching three-dozen BofA commercial bankers to Minnesota to call more than 300 middle-market businesses.
The response from other Midwest banks?
Norwest Corp., Minnesota's largest bank, said it often makes that many calls a week.
Bank of America's Marcus Acheson, executive vice president of commercial banking, said he could not predict how much business the sales trip to Minneapolis would prove to have drummed up. But he insisted the efforts are already starting to pay off.
Local bankers greeted the strategy with skepticism, saying Chicago is a long way from the Twin Cities.
"It's good to get out and wave the flag," said Richard Schoenke, chief executive of Firstar Bank Minnesota. "On the other hand, most of us go out on a regular basis. We're not going out there for two days and saying, 'Hey, you won't see us for a year.'"
But Mr. Acheson maintained his strategy is working. BankAmerica's $2.6 billion Midwest loan portfolio, with credits of $2.6 billion as of April 30, is up 20% from the same period a year ago. He said his company's sales trips are responsible for much of the growth.
BankAmerica is trying to capture the business of companies with annual sales of $50 million to $500 million. In addition to lending, the company is also pushing its cash management and foreign trade services. It's not a new strategy. Chicago-based Continental Bank Corp., acquired by BankAmerica in 1994, followed it too.
BankAmerica has also launched sales assaults in Detroit, Grand Rapids, Mich., Indianapolis, Kansas City, Mo., Milwaukee and St. Louis. The Twin Cities, Mr. Acheson said, are particularly vulnerable because of less competition there. He said two banks, Norwest and First Bank System, dominate middle-market lending, which leaves the door open for another big lender.
Minneapolis bankers said BankAmerica is welcome to compete, but disagreed their market was underserved. Moreover, they echoed other Midwest bankers who said lending to midsize companies requires relationships that take time and proximity to construct.
"Our business is profitable because we build relationships," said Scott Kisting, president and chief executive of Norwest Bank Minnesota. "One of the reasons we don't run all our middle-market lending out of Minneapolis is because we know it requires local relationships."
Mr. Acheson said he doesn't expect to steal all of Norwest's business, but he said growing manufacturing, agribusiness, and service companies need additional services, such as foreign trade. Norwest said it can offer anything BankAmerica can offer.
Mr. Kisting knows the BankAmerica strategy well, having worked there for 18 years. He ran sales blitzes when he was an executive vice president overseeing middle-market lending in Los Angeles in the late 1980s. "It gets people energized," he said.
That motivation extends to local bankers who turn up their own sales efforts. "We were delighted to see local bankers get real nervous to see us," Mr. Acheson said.
When BankAmerica's sales force landed in Milwaukee in March 1995, their newspaper advertisements were answered by ads from Firstar Corp. that skewered the bank, calling it an outsider.
Milwaukee was a tough market to crack because of competition, Mr. Acheson said. But he said Indianapolis and St. Louis - like the Twin Cities - hold real potential for new accounts.
Ohio's biggest cities are the next targets for a BankAmerica raid. Mr. Acheson said his sales force is likely to hit Cleveland and Columbus in September and, perhaps, Akron and Cincinnati.
"We're not concerned," said Dan Shingler, a spokesman for Cleveland- based National City Corp. "We believe good loans are made through knowing customers well. We don't approach lending as a one-day activity."