Bank of America to Close Some Branches, Test Remote Video Wealth Advisers
Bank of America Corp., the biggest U.S. lender by assets, will close some retail branches this year and try to boost revenue from remaining locations by offering investment advice by videoconference, a company manager said.
The bank typically closes underperforming branches and will be “more conservative” about opening new ones, Walter Elcock, the executive responsible for the firm’s branches, said last week in an interview. He declined to say how many will be closed. The Charlotte, North Carolina-based firm plans trials this month of video conference rooms where Merrill Lynch associates dispense advice to customers from afar, Elcock said.
Bank of America, socked by new U.S. regulation that reduces overdraft and debit-card fees, plans to trim consumer banking expenses and increase sales through its Merrill Lynch brokerage, acquired in 2009. The company had 5,856 branches at the end of 2010, a 2.6 percent drop from the year earlier, and will “continue to downsize” its retail footprint, Chief Executive Officer Brian T. Moynihan told analysts last month.
“We’ve reduced the opening number, and the closure number has been fairly constant, so over time I think the number will keep going down,” Elcock said. “It’s not only because of economic changes; there will be leases that come up on buildings that just aren’t worth it anymore and we would leave a site.”
U.S. banks may close as many as 5,000 branches through 2012, Meredith Whitney, the former Oppenheimer & Co. analyst who now runs her own firm, said in a Nov. 18 report. Bank of America, which peaked at 6,149 branches in 2007, is behind only San Francisco-based Wells Fargo & Co. in the number of U.S. banking centers. Wells Fargo has 6,335 locations; JPMorgan Chase & Co. has 5,268 and Citigroup Inc. has 1,001.
“The trend is closing branches in less densely populated areas and focusing on the more affluent, and to deck those locations out with a full suite of offerings,” said Sophie Schmitt, a Boston-based senior analyst at research firm Aite Group LLC.
As many as 10 percent of Bank of America branches eventually may become “specialty stores,” with a Merrill associate, a small-business adviser or mortgage expert, or video links to those representatives, Elcock said. Moynihan emphasized marketing products to customers across deposit, small business and wealth management divisions in a November meeting for the bank’s top 200 executives.
Branches in Los Angeles and the Washington, D.C., area will begin trials of the video conferencing rooms this month. Clients will speak with Merrill associates in Hopewell, New Jersey, Jacksonville, Florida, or Chandler, Arizona, said Anne Pace, a spokeswoman for the bank. While they are trained to give investment advice, associates don’t have set relationships with clients, as financial advisers do, Pace said.
New branches are more likely to be smaller with an area dedicated to automated teller machines, said Elcock, who started at a predecessor firm to Bank of America in 1974. There will also be more ATM-only shops, Elcock said. He reports to Joseph Price, head of the company’s consumer-banking division.
“The physical channel is going to be an anchor for a long time to come,” Elcock said. “Does it have to be more efficient? Yes. Is it more challenging right now with the way the economics have changed in the business? Yes. But what is surprising is how many people want it there.”
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