The recent wave of bank consolidations was supposed to spark mass branch closures throughout the Manhattan market.
Two years later, it seems that prediction hasn’t come to pass — despite Chase acquiring Washington Mutual, Wells Fargo acquiring Wachovia and TD taking over Commerce Bank.
While banks have obviously halted the expansion tear they were on during the boom, when they were signing leases for storefronts on what felt like every Manhattan corner, a couple are actually talking about expanding again — albeit at a far more cautious pace. In fact, the number of branches in Manhattan rose slightly from 2008 to 2009, up 5 percent to 699, according to the most recent annual data from the FDIC.
But brokers caution that there could still be closings of Manhattan branches in the coming months. “A lot of the banks have leases that are running out over the next 24 months,” said Jeff Winick, CEO of Winick Realty. “It doesn’t mean they’ll renew them.”
TD Bank seems to have the biggest Manhattan expansion plans. The bank sees the potential for about 50 new branches. Citibank, with 66 Manhattan branches, is also looking for new branches, brokers said.
TD’s growth is part of the bank’s national expansion strategy, said Peter Meyer, the company’s marketing president for New York City. That growth is possible because “we did not have a lot of the financial problems that a lot of the other banks did,” he said.
A division of Canadian firm TD Bank Financial Group, TD North purchased Commerce Bank, with 28 Manhattan branches, in 2008. Since the acquisition, TD has opened four Manhattan locations and closed one Commerce branch. This year, TD will open two new branches, at 444 Madison Avenue and 224 West 58th Street. The bank is now eyeing new branches in Harlem, Inwood, Washington Heights and the Financial District. The biggest challenge, Meyer said, is finding retail spaces that fit the company’s bill. “We don’t do anything in the middle of a block or open in tiny, dinky vestibules,” Meyer said.
Meanwhile, Citibank has placed offers on properties being leased by Winick Realty, although no deals have been struck, Winick said.
“We would consider Manhattan a growth market and we are committed to the Manhattan marketplace,” said Natalie Riper, a Citibank spokesperson.
Despite its struggles, Citibank opened one new Manhattan branch last year and one in 2008, versus four in 2007. Citibank did not close any branches in the city in 2008 or 2007.
So what happened to the predicted branch closings?
“Everyone expected it, [but] that has not happened,” said Howard Dolch, cofounder and principal of the Lansco Corp. He said that while a clothing chain will close a location that’s not doing well, “banks just don’t want to appear to be contracting.”
What’s more, “they want to prevent competition from taking locations.” And unlike closing a traditional retail location, closing a bank branch is more complicated, he said. A national bank has to get permission from the federal Comptroller of the Currency, and a local community bank has to get permission from the New York State Banking Department to close a branch.
Last year, eight of the 36 Manhattan branches Chase inherited from Washington Mutual were shuttered, said Michael Fusco, a Chase spokesperson. Fusco declined to comment on Chase’s current plans in the city.
However, Fusco did say that the bank would focus on markets nationwide that it has “underpenetrated,” such as Florida and California, as opposed to markets where “we already have a significant presence,” he said. “We have the number-one market share in Manhattan.” (Chase has outlined a strategy to open 100 to 120 branches annually nationwide.)
According to Winick, Chase will open a branch at the new Columbus Square, a mega mixed-use complex from West 97th to 100th streets between Amsterdam and Columbus avenues. Fusco declined to confirm the opening “for competitive reasons.” (Bank of America has also opened in the complex.)
Bank of America currently operates 41 branches in Manhattan. In 2007 and 2008, it opened 10 branches, including one relocation. In 2009, it opened six Manhattan branches, including one relocation. It didn’t close any in either year.
There are two additional Manhattan locations scheduled to open this year: at 16th Street and 8th Avenue and at 72nd and Broadway, according to Jeff Barker, New York City market president for Bank of America. “We continue to identify opportunities to expand our Manhattan presence,” Barker said.
Meanwhile, when Wells Fargo purchased Wachovia, it inherited 22 Manhattan branches. That number has remained unchanged.
No branches “have been closed or opened as a result of the merger,” said Fran Durst, Northeast communications manager for Wachovia, a Wells Fargo company. The acquisition gave Wells Fargo its first foothold in the city, where it had no branches.