In taking over WaMu, Chase has said it plans to close less than 10% of branches in the combined network. "There will be some closures in markets where there's overlap of WaMu and Chase branches, so there will be some in Chicago," a Chase spokesman based in Chicago tells GlobeSt.com. "We just don't know how many and where and when yet."
However, analysts say the number of closures will likely be significantly higher in the Chicago region, which is rich in overlap between the two company's branches. "The rumor on the street is that, in the case of WaMu, about 80% of its branches will be closed. You look at the geographic coverage, and the key is overlap," says Dirk Riekse, an SVP with Grubb & Ellis who frequently advises banks in the Chicago market. "Chase's business model for bank branches was either long-term leases or ownership driving their locations. WaMu was located more in strip centers and short-term leases. What they'll probably do, because they're short-term leases, is subleases or early buyouts."
Riekse says Chase will likely begin closing some of WaMu's branches within the next year. "WaMu has a bunch of Chicago locations, and they've grown pretty aggressively in the past few years," Riekse says. "It will definitely increase vacancy. You're looking at potentially 100 branches of WaMu being downsized."
Concern regarding bank closures and increased vacancy compounded earlier this week, with news of CitiGroup's purchase of Wachovia. Wachovia and CitiGroup were combined Monday in a $2.2-billion deal orchestrated by the Federal Deposit Insurance Corp. to prevent another potential big-bank failure. However, this more recent takeover affects the Chicago market significantly less than does the Chase-WaMu merger, given a lesser presence of both Citibank and Wachovia branches in the area. "Wachovia closures are more uncertain because Citibank doesn't have quite the platform that Chase does in the suburbs," Riekse says.
The merge will likely still result in some closures, according to a Citibank spokesman. "The deal was agreed to on Monday and is not expected to close until the end of the year," a Citibank spokesman tells GlobeSt.com. "After that we'll begin the integration. Because of the small overlap, we expect we'll close less than 5% of the branch network."
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