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UPDATE: LaSalle buyer might strike again in Indianapolis

April 23, 2007
Bank of America likely will boost small-business lending in the Indianapolis area if it follows through on its $16 billion acquisition of LaSalle Bank, banking observers say. However, they believe it would delay building a retail branch network until it could buy another bank with an established branch presence, local experts say.

Jim Young, CEO of Indiana Business Bank, said Bank of America would build on the foothold established in Indianapolis by Chicago-based LaSalle.

“I would expect BOA to come to a (market) like Indianapolis and really, really fill out what LaSalle has started here,” Young said. “I don’t think Bank of America does anything in a small way.”

LaSalle Bank is being sold to Bank of America by its Dutch-based parent, ABN Amro, as part of a larger deal considered to be the world’s biggest financial-services takeover.

In that deal, Barclays, the London-based bank giant, said it wants to buy the rest of ABN Amro for $91 billion. The deal is not a sure thing; ABN Amro said it would consider other offers.

In the Indianapolis area, LaSalle has only two offices—one downtown, the other in Carmel. The offices focus on loans, rather than on attracting deposits. LaSalle’s corporate loans typically are $100 million and above, Young said.

Bank of America helped pioneer the centralization of small-business underwriting, Young noted. As a result, the Charlotte, N.C., bank made underwriting so efficient that small loans were pushed into branch offices and handled alongside customers buying boats and other consumer goods.

That suggests Bank of America will scour the Indianapolis market for loans as small as $50,000, Young said.

However, Young doubts Bank of America, which is known more for retail banking than business lending, would start many of its own retail locations.

If the bank is serious about an Indianapolis presence, it might try to buy Huntington Bancshares, which is based in Columbus, Ohio. Huntington is in the process of buying Sky Financial Group Inc. of Bowling Green, Ohio, for $3.6 billion; Sky last year bought Union Federal Bank, which had dozens of branches in the Indianapolis area.

John Reed, president of investment banking at David A. Noyes & Co., agreed. He said Bank of America could buy Huntington or Indianapolis-based First Indiana Corp., which also has a strong local retail presence.

“I don’t think they’ll mess around building retail from scratch,” Reed said.
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