MAJOR BANK BRANCH CLOSINGS ARE ON THEHORIZON...

The debt crisis in the financial services sector, whichhas come to a head in recent weeks, has claimed retail banks aswell as some of Wall Street's biggest investment houses. Lastmonth, JPMorgan Chase acquired Washington Mutual for the fire-saleprice of $1.7 billion after the latter had the dubious distinctionof suffering the largest bank failure in US history. Wachovia,which also incurred heavy exposure to the subprime mortgage market,was to be sold to Citigroup in a deal arranged through the FDIC.However, as this was written, a Wells Fargo/Wachovia mergerannounced on Friday seemed to obviate that deal—although not ifCitigroup can help it. Regardless, the spate of high-profileM&A activity—not to mention some of the regional banks thathave gone out altogether—does suggest that we may see fewer bankbranches by 2010. A decisive 78% of respondents to last week'sonline poll agree that a big wave of branch closings is in thenot-too-distant future, and New York retail expert C. BradleyMendelson, executive director at Cushman & Wakefield, feels thesame way. Here, he explains how this is likely to playout:

"How many branches close depends on who ends up with thesebanks. You have these two mergers, for lack of a better term; oneis WaMu and Chase and the other is Wachovia and Citibank, or maybeWachovia and Wells Fargo. But Citibank is saying Wachovia didn'thave any right to make a deal with Wells Fargo and the FDIC issaying they're going to back the deal they originally backed, whichwas with Citibank. We'll see what happens. But certainly among allthese banks, there is redundancy in the New York area. There are anumber of locations where they're across the street from each otheror on the same block. Chase has 148 branches in New York City andWaMu has 35 to 40 branches in the city—they're all in competitivelocations. If Wells Fargo ends up with Wachovia, there are no WellsFargo branches in New York City. So they'll have an instantexpansion. Citibank and Wachovia, on the other hand, are redundantin certain places.