Tuesday, March 27, 2007

Why Run from LaSalle Bank?

Some times making a big deal also means making the wrong deal.
Consider the fate of LaSalle Bank, owned by the Dutch-based ABN AMRO. Chances are that this parent company of LaSalle Bank is going to be bought, probably by another European financial services giant. Conventional wisdom states that whoever buys ABN AMRO will spin off LaSalle to the likes of Bank of America, Citicorp or some other retail banking power seeking to boost its Midwest presence.
Here's my question: Why would any buyer of ABN AMRO want to dump LaSalle? Even if the acquirer pays a healthy premium to buy ABN AMRO and needs to recoup some cash, cooler heads should realize that LaSalle is a top franchise in a huge market.
LaSalle is a leader in lending to Chicago-area businesses, mainly those cash-hungry mid to small family-owned or closely-held enterprises. Sure, that's a labor-intensive business but it makes big money (especially the way LaSalle keeps hiking transaction fees.) ABN AMRO sure made it work for the last 20 years.
Throw in the fact that LaSalle has a pretty decent retail banking presence -- certainly stronger than Harris Bank or recent arrival Washington Mutual.
Citicorp a buyer? Please. For decades there's been predictions about a Citicorp Chicago expansion and it's never happened. Now that New York-based company is on a cost-cutting binge (paring 15,000 jobs reportedly), so why add more staff and branches in this town?
Toss in one more thing: brand awareness. LaSalle sponsors marathons, cultural events and lots more. Why junk that gilt-edged name? Remember, Macy's dumped the Marshall Field's & Co. name because it wanted to build a "national" brand. See how well that's working out?
Whoever buys ABN AMRO would be smart to take a real close look at keeping LaSalle. Maybe even investing in it.

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