If there really is gold in those Western hills, Scott Sanford says now is the time to find it. But he won’t be the only one looking.
Sanford recently took over as chairman and CEO of Mellon West, a private banking arm of Pittsburgh-based Mellon Financial Corp. The West is new for Sanfordhis 19 years in banking were in the Eastbut he says the West is ripe for the taking.
The reason: The two banks that had long reigned over California have been taken over by outsiders; Bank of America by the former NationsBank of North Carolina, and Wells Fargo by the former Norwest Banking Corp.
"Customers of these out-of-state banksand even their own employees question their commitment to the Western part of the U.S.," says Sanford.
Mellon is not alone in its thinking. Other eastern banking companies, namely Citigroup and Bank of New York, are gearing up for a shootout in the west as well.
Citigroup Private Bank named Michael Davis head of its California banking offices in early June. Davis, who was hired by Citigroup in February, spent 25 years in Bank of America’s California private banking group. And Bank of New York’s western arm, Bank of New York Western Trust Co., recently hired Keith Kuhn, a former Mellon employee, as its chairman and chief executive officer.
All three have said they see great growth opportunities in the Western markets, specifically California, one of the most affluent states in the U.S. "Nobody really has a lock on this market," says Citigroup’s Davis. "While the wealthy here may have taken a slight hit, there’s still a good deal of wealth, and good opportunities for growth."
Sanford says the reason for the current rush of enthusiasm for the Western market has been the disarray caused by the number of acquisitions. Sanford charges that there has "been a loss of focus on the customer on the part of the major competition." And he says it’s "probably gotten worse" over the last four years.
Mellon West has gained "dozens" of customers in the last four to five years, many of whom were former Wells Fargo and Bank of America customers, says Sanford. Specific numbers were not disclosed.
"I don’t think we’ve lost touch with our West Coast area," says Ravi Poorsina, a Wells Fargo representative. "Since the merger, we’ve restructured to be decentralized. Decisions are made locally. So we’re more in touch with the market since the merger. Sure we’re larger, but more decision power has been given to local market presidents as a result."
A spokesperson for Bank of America said it now has a stronger presence in the West because it can offer more products to customers. Bank of America also said it has restructured and has given more decision-making power to the local offices.
New Players Welcomed
Meanwhile, Sanford says the nature of business in the West allows new players to enter the game and be competitive. "People are more open in the West to trying new things and new ideas," he says. "And out here it takes less time to establish new relationships."
Similarly, Bank of New York’s Kuhn said in the March U.S. Banker that attracting the attention of new business is easier on the West Coast because business relationships are not as old, compared with those in the East.