Barclays might be good fit for LaSalle Bank, Chicago

Barclays might be good fit for LaSalle Bank, Chicago
By Becky Yerak
Copyright © 2007, Chicago Tribune
Published March 20, 2007

How does the Barclays Bank Chicago Marathon sound?

LaSalle Bank, Chicago's second-biggest bank and the civic backer of everything from athletic events to a Loop theater, could be getting a new, foreign owner.

Amsterdam-based ABN Amro said Monday that it's in "exclusive preliminary discussions" with Barclays PLC of the United Kingdom. ABN is nearing a deal to be bought by Barclays for more than $80 billion, The Wall Street Journal reported Monday night.

The possible merger, coming less than a month after a British hedge fund began publicly prodding ABN to break itself up to boost shareholder value, helped drive American depositary shares of ABN up more than 14 percent, to $41.36, on the New York Stock Exchange.

"The talks are at an early and exploratory stage and there can be no certainty that they will lead to a transaction," ABN announced Monday afternoon, saying it wants to "explore value creation for all stakeholders."

If a deal is struck and if Barclays chooses to keep LaSalle -- a big "if," according to Chicago-area banking observers -- it would become a major player on Chicago's retail banking scene overnight. LaSalle has deposit market share in the Chicago area of 14.1 percent, trailing only JPMorgan Chase's 15.3 percent.

ABN has been rumored for years to be a merger candidate, and a Barclays deal could mean less upheaval for LaSalle workers than if, say, a major U.S. bank were to buy it, an executive at a LaSalle rival said Monday. That's because Barclays isn't a major U.S. retail banking force.

For LaSalle workers, "if they got bought by Barclays, it might be better than if it got bought by a U.S. bank," said the rival, speaking on the condition of anonymity. "If Bank of America or Wells Fargo or Wachovia said, 'We'd like to get in Chicago in a big way,' they'd have a lot of U.S. infrastructure already in place that would make more operations in Chicago redundant."

For competing Chicago banks, the entrance of Barclays into the Chicago market might be preferred over an existing player. That's because Barclays is a non-entity on the Chicago retail banking scene and would have to start from scratch to introduce itself to the market if it chooses to introduce its brand.

"A deal between Barclays and LaSalle would bring in a new player, but not necessarily a strong player," the rival said. "We'd rather have someone with no name recognition," such as Barclays.

But another Chicago-area banking rival doesn't think Barclays would change LaSalle's name.

"LaSalle is such a strong brand in Chicago and Michigan," said the individual, who expects Barclays would keep LaSalle, as well as its name, as ABN did.

Although Barclays is an unfamiliar name to Chicago banking consumers, it wouldn't be coming in with no knowledge of the U.S. or even Chicago banking business.

That's because two of Barclays' top retail banking executives in the United Kingdom joined the company in recent years from Washington Mutual Inc., which, until recently, had aggressively expanded into the Chicago market.

Deanna Oppenheimer joined Barclays in August 2005 as head of UK retail banking and later recruited former Washington Mutual executive Mike Amato, who is now chief distribution and product officer in UK retail banking for Barclays, according to a November 2006 Financial Times story.

Some Chicago-area banking observers downplayed the news of LaSalle's possible new owner.

"LaSalle has been owned by a foreign holding company for a number of years and has operated in our community very well despite foreign ownership," said Jay Fritz, an executive at Midwest Bank Holdings Inc.

Others are eager to find out whether Barclays will keep LaSalle if a deal with ABN is consummated.

"The next decision is, do they keep the U.S. presence or get rid of the U.S. presence?" said George Morvis, chief executive of Financial Shares Corp., a Hinsdale-based marketing consultant to the financial-services industry. "It would be interesting to see if one of the reasons they bought ABN was to access the U.S. retail market."

In contrast, if, say, Bank of America or Royal Bank of Scotland Group PLC pursued ABN, they would already have a Chicago scale and brand name upon which to build. Royal Bank of Scotland is the parent of Charter One.

As one of the nation's biggest banks, Bank of America has more than 5,700 U.S. branches, though in the Chicago area it has only 56 branches with market share of less than 2 percent. But Bank of America recently mentioned LaSalle as one of two U.S. banks it would be interested in buying. Already a powerhouse on the U.S. retail banking scene, if not in Chicago, Bank of America would be more likely to obliterate LaSalle jobs than Barclays.

Meanwhile, Royal Bank of Scotland, which in the past analysts have said might be interested in ABN, has about 130 Chicago-area branches with deposit market share of 2.8 percent.

In mid-2004, the Financial Times said ABN had "in the past flirted with Barclays."

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byerak@tribune.com