Big Banks Are Merging & Buying Each Other Out - Will They Fail or Succeed?
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Department Store Banking: The Wave of the Future

Article by Summer Banks (4,419 pts )
Published on Oct 6, 2008
Back in the 1980s, department stores were buying other department stores chains like there was no tomorrow. Many of these merged businesses eventually failed and dissolved into nothing. Today, banks are following suit. Will they fail as well?
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Back in the Day

Remember back in the 1980’s when department stores were appearing and disappearing every day? Ames bought Zayre and then went out of business. Rich’s just folded. Bradlees almost made it but finally let the ship sink when the stocks crashed twice in the same decade.

Banking Merged

Today we’re seeing the phenomena with banks. The latest victim, Wachovia, is being pulled by two different giants. According to Comcast.net news, Citigroup has an exclusive negotiating contract with Wachovia until October 6, to purchase the bank and all its assets for 2.2 billion dollars. Then along comes Wells Fargo offering 15 billion in the middle of that contract.

While the Wells Fargo offer is definitely a more attractive offer on the face of the dollars being offered, will it be a better decision for the investors of Wachovia? It’s ironic that we never see that question addressed in reports of these

mega mergers.

Just as in the 1980’s when department store after department store was bought, leveraged, or merged we’re witnessing a culling of the banking market. Soon, we will be reduced to two or three major banking chains competing based on price and not value, just as we see with the stores. Will we also see niche banking? Will small specialized boutique banks vie for our money based on where their investors are located?

Wal-Mart Bank?

BankAmerica tried that once. It doesn’t exist anymore. Perhaps that was due more to its size and less with the promise of Americans providing banking for Americans. I can easily envision a WalBank or MoneyTarget or even Kohl’sKash in the not too distant future.

Just like the mega department stores our choices will be limited to what the bank considers the best value for itself instead of the customer while we watch their weekly flyers for the best sales.

Reference Link

Article Cited: http://www.comcast.net/articles/news-finance/20081005/Wells.Fargo.Wachovia/


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