KAI RYSSDAL: Since the markets closed last Friday afternoon, $127 billion in mergers and acquisitions have been announced. The biggest by far is British banking giant Barclays shelling out $91 billion for its Dutch rival, ABN AMRO. The deal could bring a wave of mega bank mergers all across Europe.
But before you say, “So what. Why should a European bank deal matter over here?” do me a favor and take a listen to Sam Eaton.
SAM EATON: One of the conditions in Barclays bid for ABN AMRO was that the Dutch banking giant shed its Chicago-based unit, LaSalle Bank. A group of rival bidders, led by Royal Bank of Scotland, wanted to keep the LaSalle Bank as part of any ABN buyout.
It may be too late for that now, since Bank of America has already snatched up the Chicago bank for $21 billion.
Banking consultant Bert Ely says that’s a bargain.
BERT ELY: This deal almost gives a once-in-a-lifetime opportunity to really build a good, solid, broad presence in Chicago and throughout the Midwest.
Something Bank of America has been trying to do for some time. Through its merger with LaSalle, B of A will rocket to the top of the third-largest deposit market in the U.S.
David Manning with the Community Bankers Association of Illinois says in the past, prohibitive regulations kept the big banks out of Chicago.
DAVID MANNING: The result of that, we think, is positive. It’s created a market that’s more diversified in the Chicago area. And diversification has really resulted in a more competitive banking market.
That means Chicago consumers get higher payouts on deposits and cheaper loans.
Manning says the LaSalle buyout isn’t likely to change that, since Bank of America will only control 14 percent of the Chicago deposit market.
He says the more worrying trend is a national one. Bank of America is getting dangerously close to the federal cap that limits the share of deposits any one bank can control.
In Los Angeles, I’m Sam Eaton for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.