WaMu sale could mean 40 branch closings in New York City

By Adam Pincus | September 26, 2008 04:39PM

The emergency purchase by J.P. Morgan Chase & Co. of the banking operations of the failed Washington Mutual yesterday could lead to the closure of around 40 branches in New York City by the end of 2010, according to an analysis of a statement describing the purchase.

Chase said yesterday that up to 10 percent of the branches in overlapping markets would close by the end of 2010.

Chase has 293 branches and WaMu has 136 in New York City, according to Federal Deposit Insurance Corporation, totaling 429 branches.

The 40 figure “could swing up or down,” said a banking official familiar with the purchase, who asked not to be identified.

He said the final number depended on the proximity of branches to each other, as well as other factors like branch location and lease terms. The branches to close could be either Chase or WaMu ones, he added.

Brokers said the closures could provide an opportunity for other businesses to move into crowded retail corridors, but could further depress prices in areas with low demand.

Bill Melville, senior managing director for real estate firm Lansco Corporation, said the closures would affect different markets in different ways.

 “It could be a good thing, as a way in for people looking for space, but if they are in an area with a fair amount of space available it could further erode” pricing, he said.

And the purchase could put Chase in the position where it would have to lease to a competing financial institution, Melville said.

“If you are Chase and have two branches on one corner you are probably not going to sublease one to another bank,” said Melville, who does not represent either bank. “But that depends on how much demand there is in the marketplace. That might be the only option.”