In a recent article, The Atlanta Journal-Constitution highlighted an aspect of failed bank acquisitions that isn’t usually given much attention: acquiring institutions closing one or more of the branches that were acquired from the failed institution.
As the article points out:
Most branches have remained open as they provide the acquiring bank with access to new markets. But a growing number of branches have closed down or been absorbed into a buyer’s existing banking network.
Most decisions to close branches have been made because of location: The newly acquired branches are too close to a buyer’s existing branches.
We often hear that ‘nothing will change’ and it will be ‘business as usual’ when we read about an institution acquiring a failed institution. But, it’s easy to see why decisions to consolidate or close branches could be made due to proximity to existing branches in the network.
At the same time, it seems that these situations should hold opportunity for other local institutions to tap into customers’ frustrations about the bank failure, the acquisition, and the subsequent closure of the branch or branches - or, to expand their own branch network through the acquisition of the jettisoned branch or branches.
I’d like to see data about the attrition rates of failed bank customers (I’d expect the rates to be higher than in an acquisition under ’normal’ circumstances), how many of these branches are jettisoned after acquisition nationally, and whether the failed bank customers would be more likely to continue banking with the acquiring bank after their branch closure - or perhaps switch to the institution that moves into that branch location.