Will any Hoboken banks close?

5/6/2008 Question of the Day:

One of the conversations that takes place in Hoboken (especially when a business closes) is: “Will it be another bank, nail salon, cell store or dry cleaner?”

Many residents feel we have too many banks in town. Do you think any bank branches will close this year?

I asked a few branches in town, and they seem to think not. We’ll see what happens!

Large Banks Beginning To Close Branch Locations

Consumers and businesses are faced with two difficult problems as a result of major banks taking huge write-offs. The first is that, ever though the Fed is chopping rates, lower interest is not making it to consumer or business lending. The banks have elected to use the money they get inexpensively from the Fed to improve their own balance sheets. They want to take as little lending risk as possible while the economy is still in trouble.

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The other by-product of troubles at large money center banks like Citigroup, Wachovia, Wells Fargo, and Bank of America is that closing local branches is a fast way to bring down costs. Doing this without losing customers is somewhat easier because of online banking and ATMs.

Banks in the deepest have already begun the process. Washington Mutual plans to take out over 3,000 jobs in the short-term and Citigroup has said it will lay-off 9,000. Some of those jobs will be administrative, but these financial firms have huge numbers of people in location through-out the regions which they serve.

Bank of America operates 6,200 branches. Operating a local office can cost $1 million a year when employees, overhead, and rent are factored in. If the bank shuts 10% of its locations it can save over $600 million a year.

Mid-sized regional banks may be under even more pressure to cut costs. National City Corp recently reported a huge loss and had to raise over $7 billion. It has eliminated its dividend and must now look for new places to take out costs. Regional bank Peoples recently closed 20 branches in one small section of Connecticut. Banks usually look for locations outside where their core customer “foot prints” are and shutter locations there.

To a large extent banks are willing to let some consumer and smaller business customers go. These groups tend to have high default rates in a recession. Individuals and companies with relatively small revenue often are in no position to weather a downturn in the economy and lending to these groups has already slowed to a crawl.

Businesses which have been under-served by banking institutions are about to see that situation get worse as banks which invested in risky assets try to save themselves from insolvency. Borrowing money has gotten tough, and it is about to get worse.

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9 Comments on "Will any Hoboken banks close?"

plaintruthiness
Member
plaintruthiness

That’s true and must explain why there are no banks on the West side of town (except for that mini-branch in ShopRite). Where’s Michael Russo when we need him? Move some money to the West side.

johndoe
Member
johndoe

There are so many different banks in Hoboken because there is so much money here. Poor neighborhoods no banks ( check cahing places, but no banks).

What I don’t get is why Washington Mutual needs 6,000 sq ft on Washington St. Or why commerce bank at the corner of Newark and River has to be so big. Looks like the banks just enjoy paying rent for no reason.

In the old days banks had big buildings to show he depositors it had hard assets to secure their money. But today these banks are renting the space which is a liability not an asset.

CharlieAParker
Member

[quote comment=”81697″][quote comment=”81474″]TD Banknorth just took over Commerce Bank[/quote]I heard that the TD / Commerce bank rebranding has not yet come together due to some trademark lawsuit from a bank out west. I think they were supposed to have completed by earlier in the year.[/quote]

I’m still not used the Capital One Bank branding.

zxcv
Member
zxcv

[quote comment=”81474″]TD Banknorth just took over Commerce Bank and they’re only 2 blocks from each other. They’ll become TD Commerce Bank. If they were smart, they’d keep open the fantastic renovated branch on Newark St. and close the beat-up 101 Washington St. branch.[/quote]

The 101 Washington Street branch is great once you get inside. But the one at 6 hundred something Washington Street…yeeesh…

The 101 Washington Street branch would make a great restaurant, with its high ceiling, all the marble and brass, etc.

I heard that the TD / Commerce bank rebranding has not yet come together due to some trademark lawsuit from a bank out west. I think they were supposed to have completed by earlier in the year.

ntableman
Member
ntableman

bank AND real estate shops should be closing – one can only hope it means commercial leasing rates drop and normal useful businesses open, unless it is another crappy fake irish pub….i would rather have banks over that….

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