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Falling profits and tighter margins will prompt banks to close 5,000 branches nationwide in the...

Falling profits and tighter margins will prompt banks to close 5,000 branches nationwide in the next 18 months, says Meredith Whitney, or roughly 6% of the country's branches. As many as 41M U.S. households won't have access to banking services, up from 30M last year.
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Comments (5)
  • Tony Petroski
    , contributor
    Comments (6368) | Send Message
    "As many as 41M U.S. households won't have access to banking services, up from 30M last year."


    Who are we kidding with that? Are we setting up for a Department of Access to Banking Services headed by Tsar Whitney?


    My 10-year-old with his meager account has access to banking services. And the poorest of the poor in my city spend an inordinate amount of time surfing the internet.


    Let's get real.
    23 Nov 2010, 08:26 AM Reply Like
  • youngman442002
    , contributor
    Comments (5129) | Send Message
    There are not any right now...what can you get at a bank?...a are just service charge generators...
    23 Nov 2010, 08:35 AM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
    There are too many banks and therefore there are too many branches. Jeez what a brilliant thought Meredith.


    Many banks are solely profitable today because their "cost of funds" (aka, raw material costs) are as near zero as they can get. Banks are not making many loans because those who need loans most are most likely uncreditworthy and because the potential return on those loans is too low to provide an adequate return for the risk taken.


    Overall profitability has suffered and will continue to suffer. Any good business person knows that in the face of such a predicament they must reduce costs. Voila, we can close some underutilized branches and cost personnel and operating costs.


    There is going to be a shake out in the industry. Many unprofitable banks are going to be merged out of existence or shot (closed) and put out of their misery. With this consolidation there will job losses and there will be many, many branch closings.


    My young adult children do not use their bank's branches. They do their banking either at an ATM or online. Someday they might need to enter the branch but that will be the exception to their banking experience.


    Even I, the dinosaur of the family rarely use the branch anymore. Go ahead and close it, I'll figure it out.


    As for the underbanked, they will be served by some institution just not for free as they have been for the last three decades.
    23 Nov 2010, 08:47 AM Reply Like
  • zorrow
    , contributor
    Comments (1668) | Send Message
    Less branches, less employees, more profit per branch, less competition, and niche marke topportunities for internet banking to serve underserved geographies. Would this be an opportunity for strong traditional regional banks to expand profitable market share? What is the main downside of fewer brick and mortar bank branches? Would Diebold and NCR benefit by more demand for their kiosk machines in supermarkets in underserved markets?
    23 Nov 2010, 09:20 AM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
    In my opinion, Meredith is correct. Profits will suffer for some time until there it a right sizing in the industry. The TBTF's will take longer to right size but will "eventually" recover strongly. The large Regionals have an opportunity to take market share in the mean time. The banks under about $10 billion have the most difficult road ahead. They are too small to fully product diversify and too local to geographically diversify.
    As for Diebold and NCR, how many ATMs are there and what is the right number to be profitable. I do not know that answer but I believe there is an upside limit somewhere.
    23 Nov 2010, 09:40 AM Reply Like
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