The Big Banks are Born>“In the long run, however, it’s about reinventing banks…At the same time, the race to the trillion-dollar bank is part of a bigger phenomenon. The emerging megabanks will be a geographically diverse conglomeration of traditional banking, mixed with an array of other financial services from stock brokerage to insurance to mutual funds…While creating a $1 trillion bank is now plausible–and plotting its strategy on paper is possible–making such a megabank succeed will be an amazing management feat. That’s a tall order in the banking business. The sheer scope of such a large and unproven institution is daunting…But these bankers believe that running a $1 trillion bank will not be any more complex than piloting General Electric or General Motors, Exxon, or Coca-Cola…Indeed, some in the industry see the current race for size as a dangerous excess, driven simply by egos and inflated share prices. Richard M. Kovacevich, chairman of $88 billion Norwest Corp. in Minneapolis, has undertaken dozens of small acquisitions–but he’s skeptical about bank megadeals. ‘The fact that they’re big and national doesn’t give them any more of a competitive edge,’ he says. ‘You get big because you’re better. You don’t get better because you’re big’…The dealmakers, of course, beg to differ. ‘Bigger is indeed better,’ a beaming McColl boasted at the press conference announcing the BankAmerica deal. ‘We’re not in any business we don’t understand. We think we’ll add to our product mix.”’—BusinessWeek, April 27, 1998
