There is no need to panic when the
word comes down that your bank has
merged with another financial institution or was acquired by another bank. But
do try to stay in touch with your account
officer and sort things out together.
“Every organization has a unique culture,” says Sue Zazon, president and CEO
of FirstMerit Bank’s Columbus region.
“If I were a business owner, I’d give
myself a chance to see if the new bank is a
fit or not. You won’t know right away,
unless you had previous experience with
that particular bank.”
Smart Business asked Zazon for guidelines on dealing with the sometimes-daunting experience of seeing your favorite
financial institution involved in a merger or
acquisition.
Are bank mergers/acquisitions different than
corporate mergers in other industries?
The motivation for the corporate take-overs you read about in the newspaper is
probably the same as the takeover for a
bank: increasing market share, lowering
expenses, earnings-per-share growth, acquiring specific products or geography. I
don’t think the banking industry and other
industries are much different from each
other in this regard because they all
address the same constituents — that is,
their shareholders.
If I am a commercial customer and I hear or
read that my bank is involved in a merger,
should I be concerned?
Near and dear to most companies’ hearts
— especially middle-market companies in
an area like Columbus — is what’s going to
happen to their credit relationships. For
small- to mid-sized companies, the bank
can be their sole source of financing. Don’t
overreact. Most people tend to think the
worst: ‘I’m going to lose my line of credit,’
or ‘I’m going to lose my loans.’
Make sure you talk to your relationship
manager and his or her boss. You want to
know information about the other bank
and its reputation. Sure, there are going to
be a lot of ‘I don’t know’ answers because they really don’t know.
It takes time for the bank that is being
integrated to iron out all the issues. Banks
in general need more customers to grow
their business. They don’t merge or acquire
another bank to kick customers out. That
would be counterproductive. You may,
however, be in an industry or business —
like a parts supplier to the auto industry —
that’s a higher risk in the current economic
environment.
So you may need to know how the new
bank views your business. It helps if you
know multiple people in multiple positions
at the bank. Knowing both your relationship manager and the credit person will
position you well. Advocacy from both is
important especially during changing and
difficult economic times.
How important is the relationship between
the bank and the customer?
Bank/customer relationships are the
most important thing. Merger or no merger, you need to have a relationship with the
bank. If you know your relationship manager well and you know the team leader or
regional manager, you’ll be as informed as
you can be.
Are there advantages to banking with an
institution that has gone through a recent
merger?
One advantage may be new product and
service offerings that the combined bank
may have. For instance, if your company
needs to do a lot of international business,
it’s a benefit to you if your regional bank is
acquired by one with international services
and foreign offices.
On the other hand, banking with a bigger
bank has the potential to be more expensive on some fronts, while product offerings may be more standardized and less
customized.
Another concern I often hear is that people feel like a number at a big bank. I think
that feeling at any bank comes down to the
service you receive from your branch and
relationship manager. Even at a big bank,
you can feel important. However, it is true
that you become a ‘smaller fish in the sea’
as banks increase in size.
Are post-merger changes more likely to be of
a systemic or personal nature?
I would ask my account officer how he or
she envisions the merger impacting my
relationship with the bank. Is your relationship in jeopardy? Will it cost you more?
Are the same products and services going
to be available?
Chances are you’ll have the same
account officer because the new bank
needs someone to service your account.
Most personnel savings from a merger are
in the back office. What may change is the
credit approval process and senior managers. Also, there will probably be a different product offering. You may fit well into
a product that your new bank has, so you
might be able to save money. Or the new
bank may have a higher fee schedule.
SUE ZAZON is president and CEO of FirstMerit Bank in
Columbus. Reach her at [email protected] or (614) 545-2791.
