NEW YORK — Ben Jenkins, head of Wachovia Corp.'s general bank, has some advice for JP Morgan Chase & Co. President Jamie Dimon: Don't fret about Wachovia encroaching on Chase's turf in New York City.
"He shouldn't worry," Jenkins said in an interview Wednesday in the basement of a Wachovia branch in Manhattan. "We're not hurting them."
"Not yet," chimed in Michael Slocum, who leads Wachovia's operations in New York, New Jersey and Connecticut.
With just 13 branches in New York City, Charlotte, N.C.-based Wachovia lags far behind industry leaders Chase, Citigroup Inc. and Bank of America Corp. (BAC) in the battle for supremacy in New York's lucrative retail-banking business.
But Wachovia is among a handful of aggressive regional banks that recently have pushed into the Big Apple, unleashing a frenzy for New Yorkers' banking business. Dimon, unveiling a major expansion of Chase's New York ATM network on Tuesday, declared that Chase is New York's "hometown bank" and said it doesn't "intend to lose to the Brits or the Carolinians," an apparent reference to Wachovia, Bank of America and British-based HSBC Holdings PLC.
On Wednesday, Wachovia responded with an initiative of its own. The bank plans to open as many as a dozen branches in Long Island and to roughly double its presence in Manhattan within the next two years.
Executives also said they would consider turning to a "small acquisition" to bolster Wachovia's presence in New York.
Until now, Wachovia has focused its fledgling New York City banking efforts on midtown Manhattan, where the bank has clustered 12 of its 13 "financial centers." The initial goal was to provide better services to its roughly 130,000 pre-existing customers who commute into Manhattan from their homes in northern New Jersey, where Wachovia has a strong presence.
But the bank is now looking to penetrate New York's residential areas, where the market is more fragmented and smaller regional banks tend to be stronger than in the city. Wachovia will open its first Long Island branch in the autumn and will follow that with new branches in Manhattan neighborhoods including, at some point, SoHo and Harlem, Jenkins said. The bank doesn't have immediate plans to branch into the other four boroughs of New York City.
While it is expanding into a new market, Wachovia doesn't plan to change its basic approach. The bank will continue to build up a strong presence in narrowly defined geographic areas instead of trying to blanket much of Long Island or Manhattan with branches.
That strategy seems to have worked well for Wachovia in midtown Manhattan.
"We're very convenient in the space we choose to compete in," Jenkins said. "What we have to guard against is wanting everything at once and spreading ourselves too thin."
Wachovia currently holds a roughly 4% share of metropolitan New York's retail-deposit market, making it one of several banks vying for the No. 4 position in New York, according to First Manhattan Consulting Group. Wachovia's "long-term goal" is to rise to be among the top three New York players, Slocum said. That would mean unseating Chase, Citi or Bank of America - a formidable task, considering they each currently have market shares that are more than double Wachovia's.
Jenkins said Wachovia plans to expand its presence in New York through "a combination of acquisitions - if they made sense - or organic growth." Any acquisitions, he said, would have to be "small" and "attractively priced." He didn't elaborate.
The company may offer to reimburse its Long Island customers for fees that they incur through using competitors' ATMs, a policy that Wachovia has in place for its Manhattan clients. The offer is meant to compensate for the relative scarcity of Wachovia ATMs in the city.
Wachovia also might consider forming a partnership with a retailer to install ATMs throughout the retailer's stores, which would be similar to the deal that Chase announced Tuesday with New York drugstore chain Duane Reade Inc. (DRD). But Jenkins said Wachovia is unlikely to pursue such a strategy until it does more to build up its New York branch network.
"We believe that ATMs can extend a market," he said, "but they can't make a market."
