Content provided in partnership with

Business Services Industry

Wells Fargo works to reassure, retain First Interstate customers

Los Angeles Business Journal, May 27, 1996 by Larry Kanter

But as the Southland's bank wars grow as vicious as those between long-distance telephone companies and fast food restaurants, Wells Fargo is striking back.

In recent weeks, Wells Fargo has taken steps to soothe the fears of First Interstate customers who may be considering jumping ship because of the merger, said Alec Hughes, Wells Fargo's director of retail marketing for the L.A. area.

For example, senior bank executives have been made available to speak with any customer with a problem, he said. And Wells Fargo also has eliminated an infamous $5 charge to see a teller. The fee accompanied several of its low-cost accounts.

Most Popular Articles in Business: Research and Markets : Tesco Plc - SWOT Framework Analysis; Do Us a Flavor - Ben & Jerry's Issues a Call for Euphoric New Flavors; eBay made easy: ready to start an eBay business? These 5 simple steps will ...; Katrina's lawsuit surge: a legal battle to force insurers to pay for flood ...; Wal-Mart's newest distribution center opened last month near the southwest ...; More »

"That (service charge) has been the No. 1 competitive advantage other banks have had on us and have been using against Wells Fargo," said Hughes. "We're looking at many of the issues that our competitors are pointing out. We're taking (customer) concerns very seriously."

If Wells Fargo is getting serious, it's because there's quite a bit at stake. The company plans to close several hundred First Interstate branches in California and eliminate 7,000 to 8,000 jobs. That has Wells Fargo's Southern California competitors - most notably Glendale Federal Bank and Sanwa Bank California - licking their chops at the prospect of capturing their own chunk of First Interstate's $50 billion in deposits.

Merger movement

Industry experts generally agree that big bank mergers prompt a number of the target bank's customers to move their accounts. Wells Fargo itself admits it lost customers after it acquired Crocker National Bank in 1986, as did BankAmerica Corp. after it bought Security Pacific Corp. in 1992. While all banks are loathe to specifically disclose the extent of those losses - or runoffs, as they are known in the industry - analysts say that 5 to 10 percent of a merging bank's customers usually are vulnerable to being snared by competitors.

Given the intensity of the current marketing campaigns aimed at First Interstate customers, as well as the public's considerable anxiety over mergers in general, the runoff rate could be even higher for Wells Fargo this time around.

Nonetheless, Wells Fargo's Hughes said he remains confident. In fact, he said, the bank is aiming for a lower-than-usual attrition rate.

While Hughes' hopes are undeniably high, his confidence is not entirely misplaced, said Bert Ely, president of Ely & Co. Inc., a bank consulting firm based in Alexandria, Va.

Wells Fargo "got very high grades" over how it handled the acquisition of Crocker Bank a decade ago, Ely said, adding that the bank also has had the luxury of learning from mistakes made by BankAmerica when it took over Security Pacific.

"They've been through this," Ely said. "Nothing's happening now that they did not anticipate. There are very high expectations."

Banks also can minimize runoffs by paying special attention to the inevitable customer service glitches that occur when two institutions consolidate, Ely said.

Business Services Industry

Wells Fargo works to reassure, retain First Interstate customers

Los Angeles Business Journal, May 27, 1996 by Larry Kanter

Find Research Guides for:

Find Featured Titles for: Sports

Most Popular Articles in Business

Most Popular Publications in Business