People’s United Bank, which operates in six states in the Northeast, will eliminate a staggering 15 branches this year, in an effort to trim the fat after a series of acquisitions, reports the Boston Globe. Could this be a sign of things to come for regional banks?
People’s United Bank of Bridgeport, Conn., says it plans to eliminate 15 of its 372 branches this year…[t]he bank said the closings are part of the company’s broader plans to consolidate operations after a series of acquisitions…[which left] it with some overlapping branches. Spokeswoman Valerie Carlson said customers of those branches will have access to other offices within two miles.
In 2008, the bank acquired Chittenden Corp., a Vermont multi-bank holding company. In 2010, People’s United Bank acquired Butler Bank of Lowell, Mass, from the FDIC, which had been named receiver of the failed bank. More recently, in July of 2011, People’s United acquired Danvers Bancorp of Danvers, Mass.
A restructuring of the business
Earlier this month, Connecticut’s Fairfield County Business Journal reported that the bank planned on restructuring, and noted that it would shed 15 retail branches. The bank’s CEO, Jack Barnes, also intimated that the bank “had identified additional moves that will result in $9 million in annual savings,” but he did not tell the FCBJ what exactly the bank planned on doing.
Barnes also said that the Dodd-Frank Act cost his bank $5 million. The story doesn’t specify whether this is a one-time cost or an annual one.
Will this become more common?
Between the downward pressure on profitability that federal regulation has brought to the industry, and the high relative costs of a retail footprint versus mobile and online banking, consolidations of this sort — wholesale closings of retail branches — might become more commonplace.
The impending “death of retail” is frequently harped upon by business bloggers, perhaps most notably Slate’s Matthew Yglesias. The idea has merit — retail outlets cost a whole lot more than online stores. Banking and selling electronics are very different businesses, but many of the same costs plague both. It’s entirely possible that we will continue to see retail branch closures of this sort, especially by banks that have expanded rapidly within a certain region.
It will likely be strip mall owners’ problem, and not yours.