LaSalle Bank's run to end - Bank of America to pay $21 billion for city institution
By Becky Yerak
Copyright © 2007, Chicago Tribune
Published April 24, 2007
Ken Lewis doesn't expect picketers outside of Bank of America branches bemoaning the loss of the LaSalle Bank name.
The chief executive of Charlotte-based Bank of America, which announced plans to buy the city's No. 2 financial institution Monday, doesn't expect anything in the way of backlash that Federated Department Stores faced when it mothballed the Marshall Field's name in favor of Macy's, even as the 67-year-old LaSalle name goes away.
In fact, in an interview Monday, Lewis said he didn't give even a fleeting thought to keeping the LaSalle name.
"What better name for a bank in America than Bank of America?" Lewis said. "We've tested it, and it blows away all the other brands in terms of recognition, and second place is a distant second."
Yet, as Federated quickly discovered, Chicago can at times be a tough town when it comes to new retail players. And new names sometimes take a while to grow on patrons here. As one analyst put it: "Chicago is a very parochial market."
Still, Lewis is bullish about his $21 billion bet on LaSalle, immediately announcing that he intends to continue the marquee sponsorship of the LaSalle Bank Chicago Marathon, saying that in "2008 it will be Bank of America" Chicago Marathon.
The name change was only one of the strategies laid out by Lewis, as Bank of America confirmed plans to buy LaSalle from Dutch parent ABN Amro. Bank of America currently has a 1.1 percent share of the retail-deposit market in the Chicago area, and the deal will catapult it to second in that category, after Chase, with a combined 10.4 percent market share.
Bank of America also acknowledged that job cuts would be in the offing, but the number of positions hasn't been determined. They will come from both attrition and layoffs over the next two years, a spokesman said. Bank of America has 200,000 workers worldwide and fills thousands of jobs annually, so affected workers can apply for those jobs, he said.
Both banks have thousands of Chicago-area workers. ABN, including LaSalle, has 8,700 here. Bank of America has about 3,700 workers in Chicago.
Bank of America is expecting to wring out $1.25 billion in cost savings from LaSalle, equaling 50 percent of LaSalle's 2006 expenses, according to Friedman, Billings, Ramsey & Co., an institutional brokerage, research and investment banking firm
But one analyst participating in a conference call with Bank of America executives Monday wondered if the planned cost cuts ultimately would result in customer defections.
Bank of America said many of the cuts would occur in such areas as marketing and headquarters support, including finance, legal and compliance.
"We're not talking about reducing client managers," Chief Financial Officer Joe Price responded.
In the interview, Lewis was asked whether recently promoted executives at LaSalle could find themselves out of a job. He said he doesn't know enough about those appointments, noting that Bank of America goes through a thorough talent review process.
Still, "you don't need two presidents," Lewis conceded.
Bank of America also revealed that LaSalle's bank branches would be reconfigured.
LaSalle's branches "aren't as consistent as ours," Lewis said. "When you walk in, you will know you're in a Bank of America branch."
Monday was a whirlwind day for Lewis.
After the early morning conference call in Charlotte, he flew to Chicago, met with about 25 Bank of America workers, then Chicago Mayor Richard Daley. He later met with Bank of America branch workers and was scheduled to meet with LaSalle's top 150 managers in the late afternoon.
Of his meeting with Daley, Lewis said they discussed education and the Olympics.
"Every single [city] competing for the Olympics was in our franchise, and it was killing us, so I'm glad it's down to one. And we'll be very supportive, as we were in Atlanta," Lewis said. "We were actually the first corporation to step up in Atlanta, and was the catalyst for others to come in, so we have some experience."
What about LaSalle appealed most to Bank of America?
"In LaSalle we see a compelling opportunity to fill in a key gap in our national franchise and build relationships with thousands of new customers in retail, private banking, wealth management and commercial and corporate banking," Lewis said.
LaSalle has been known primarily as a middle-market commercial bank, and Bank of America would like to offer new services to those customers.
"There we can bring Treasury management services and investment banking services to bear in a bigger sense than LaSalle could on its own," he said. "So that would enhance existing relationships."
The deal for LaSalle came as parent company ABN Amro agreed Monday to a $91 billion takeover by Barclays PLC and to sell its U.S. assets, holding off a bid by three banks that would have carved up the Netherlands' largest bank.
Though ABN Amro said the Barclays offer is the best one on the table, it refused to rule out alternative bids and said it would welcome a proposal from a consortium of Royal Bank of Scotland PLC, Spain's Banco Santander Central Hispano SA and Belgian-Dutch bank Fortis NV, Associated Press reported.
The deal must be approved by financial regulators in the U.S. and in Europe.