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?
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. During these times, department store banking was not a glimmer in the retailers eye, yet!
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 or department store banking? Will small specialized boutique banks vie for our money based on where their investors are located?
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. Department store banking is an idea that will flourish, we just have to wait for the right retailer to create a model the government will not consider a monopoly attempt.
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. Is department store banking such a bad idea?
Article Cited: http://www.comcast.net/articles/news-finance/20081005/Wells.Fargo.Wachovia/