Bank slugfest looms with giants’ arrival

By Paul Donsky

The Atlanta Journal-Constitution

JPMorgan Chase and Wells Fargo may be two of the largest banks in America, but the financial behemoths have had little presence in the Atlanta market.

That’s set to change, in a big way.

Both banks are entering the market through acquisitions made during last fall’s financial crisis. Chase took over troubled Washington Mutual, which had a small footprint in Atlanta, while Wells Fargo absorbed the area’s No. 2 lender, Wachovia.

With their arrival, six of the nation’s 12 biggest banks will be competing head-to-head in metro Atlanta, a list that also includes hometown bank SunTrust as well as Bank of America, Regions and BB&T.

It sets up a likely slugfest for dominance in a lucrative but already crowded marketplace. Ultimately, customers should be the big winners, said Ken Bernhardt, a marketing professor at Georgia State University.

“You have two big national companies trying to gain share, and that increased competition should force all the players to sharpen their customer service,” he said.

The showdown has already led to a spate of hiring as Chase and Wells Fargo ramp up branch staffing.

Some experts say customers could see better pricing on deposits and loans, while others argue that the Atlanta market already is so competitive consumers probably won’t notice a difference.

Chase, based in New York, is coming to town with lots of swagger and a determination to become a top player in Atlanta, as it is in most of its markets.

The bank has a long way to go: Washington Mutual had an Atlanta market share of less than 1 percent, compared to 26 percent for market leader SunTrust and 19 percent for Wachovia.

“We’re going to be a formidable competitor, there’s no question in my mind,” said Rich Sawyer, retail manager for Chase in Georgia and Central Florida. “We’re going to do it right.”

Chase recently began renovating the 55 ex-WaMu branches it now owns in metro Atlanta, putting the Chase name and logo -- a blue octagon -- on everything from storefronts to employee’s clothing.

A media blitz featuring radio and TV ads starts this weekend, followed by an aggressive expansion into the Atlanta suburbs over the next three to five years. New branches are planned in Snellville, East Cobb and Fayetteville, with many more to come, Sawyer said.

Sawyer said the bank will build enough branches to compete aggressively with SunTrust and Wachovia, which have nearly 200 branches each.

Wells Fargo is taking a more incremental approach, choosing to wean its customers off the well-known Wachovia brand over the next year or two.

So far, Wells Fargo’s logo, a stagecoach, is nowhere to be seen at its nearly 200 metro Atlanta Wachovia branches. Logos on promotional material now read “Wachovia -- a Wells Fargo Company.”

Metro Atlanta is already one of the most saturated banking markets in the country, with more than 150 different brands battling for business, most of them small community banks.

Chase officials say they have the products, services and talent to stand out from the crowd. Chase offers a much broader array of services than did Washington Mutual, such as a small business and commercial lending.

Sawyer also said the bank is financially sound and was able to return federal government bailout money -- a not-so-subtle dig at Atlanta rivals that have yet to do so, such as SunTrust, Regions and Bank of America.

While Chase is new to Atlanta’s retail banking scene, the company feels it already has substantial brand recognition through its credit card and mortgage businesses. Atlanta is also home to legions of transplants from markets where Chase banks operate.

Analysts said it would be a mistake to underestimate Chase, though it may take some time for the bank to build sizable market share.

“It will be interesting to see how much resources JPMorgan puts into the market,” said Jefferson Harralson, an analyst with Keefe, Bruyette & Woods.

“I’m not ready to say JPMorgan will be a major player in Atlanta. They have the resources to become one, and they have a business model that has worked, so I’d expect over time they’d become a significant player. It’s just going to take time.”

Wells Fargo, based in San Francisco, faces a much different challenge. Wachovia, unlike WaMu, is a well-known name in Atlanta with a reputation for some of the best customer service in the business, and Wells Fargo executives say they don’t want to mess with that success.

The plan is to meld Wachovia’s customer service with Wells Fargo’s business model of working closely with customers to sell them a range of products to meet their financial needs.

The company also plans to roll out new ATM machines this fall that will allow customers to deposit stacks of cash and checks at one time, without any envelopes.

“I think we’ve got a great strategy, and I’m confident we’re going to continue to do very well here,” said Jerome Byers, Atlanta regional president for Wells Fargo. “I’m optimistic we’re going to grow our business.”

The arrival of Chase “will change the landscape somewhat because it’s a very formidable company, it’s a great brand,” said Bill Linginfelter, the top executive in Atlanta and North Georgia for Birmingham-based Regions Bank.

But Linginfelter said the Atlanta market has long been hyper-competitive, with a demanding customer base that can be tough for newcomers to crack. He said mid-size Regions provides an advantage “because you know your customers a little bit better.”

Executives at SunTrust, the market leader, said they’re not sweating the new competition. The bank has posted strong deposit growth over the past two quarters and launched a host of new products and services, such as a Delta SkyMiles check card.

“We think we’re in good shape to compete against these two new names, and we welcome the competition,” said Gary Peacock, who heads SunTrust’s Atlanta region.

METRO DEPOSIT MARKET SHARE

As of June 30, 2008:

1. SunTrust ............26 percent

2. Wachovia*............19 percent

3. Bank of America......13 percent

4. BB&T..................5 percent

14. Washington Mutual**..1 percent

* Acquired by Wells Fargo

** Acquired by JPMorgan Chase

Source: FDIC