When cutting costs is not enough
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When cutting costs is not enough

Even after a wave of mergers and takeovers there are still 7,000 banks in the US. No-one doubts that consolidation is the way to go but the fate of recently merged banks suggests that it has to be based on something more substantial than cost-cutting. The emergence of e-commerce hammers home the point that revenue growth is still crucial. Antony Currie reports.

First Union: getting the blues up north

Wells Fargo - worth a second look

A broker's bank analyst is in Pennsylvania, visiting local money managers. Each of them has the same joke to tell. As a result of First Union buying CoreStates - which was the third-largest bank in the state behind PNC and Mellon Bank - a local sports centre sponsored by CoreStates is to change its name. Instead of being called "CoreStates Arena" it will become known as "FU Arena".

CoreStates' employees were also unhappy about the takeover. One of them had got hold a photograph of the CEO, Terry Larson, taken on the beach. He's by no means a small man. His employees used the photo as a screensaver after the merger, as a sign that they were angry with him for selling out. Customers weren't happy either: over 20% deserted CoreStates.

First Union's stock price has plummeted, its president, John Georgius, has already been sacrificed, and CEO Ed Crutchfield has had to declare publicly that his institution - formerly the supremo of buy-and-merge banking - has been forced to take a breather. Investors are livid.

Is it an isolated event? Hardly.

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