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Mellon wants change -- just not yours

Wednesday, July 18, 2001

When a friend of mine moved to New York City years ago, she tried to open an account at a branch bank in her neighborhood, only to find the process so maddening that she couldn't contain her frustration.

"Look," she said to the teller. "You're a bank; you take people's money. I'm a person; I have money. SO WHAT IS THE PROBLEM!?"

She finally got an account, but not an answer. Today, she wouldn't even have to ask the question.

Most folks realize that financial institutions are like any other business. They make a lot more profit servicing corporate clients and high-end customers than they do piddling around with the paltry accounts of regular folks. Yes, there's still money to be made in retail banking, but it's all relative.

Why baby-sit thousands of small depositors who write illegible checks for $29.95, who want live tellers to help them, who count out change at the window and complain about service fees when you can earn the same amount many times over from a single client who works in the penthouse and winters on the Riviera?

Community service, maybe? Giving back to the folks who helped build your fortune? Noblesse oblige?

Ha, ha, just kidding. I do, after all, work in the newspaper business, where the big chains have forsaken those very principles in the name of excessive profits never before seen in the industry. No reason a big financial concern should feel any more obligation to them than, say, Knight Ridder or Scripps Howard.

Which brings us to the end of Mellon Bank as we historically have known it.

Yesterday, Mellon Financial Corp. made it official. The company is selling off its high-maintenance, low-profit consumer and small business banking operation to Citizens Financial Group of Rhode Island, the U.S. banking arm of The Royal Bank of Scotland.

There's a certain symmetry there, what with founder Thomas Mellon having hailed from nearby Northern Ireland. And truth be told, the deal makes a lot of sense. Mellon hasn't been interested in the retail end of its business for several years now. Better to hand it over to someone who actually wants to serve those customers -- especially when the buyer is promising to maintain the jobs.

With the sale, Mellon will be free to go whole hog into the rich vein of money management, trust and securities processing services, plus banking for large corporate clients and wealthy individuals who live in upscale suburban neighborhoods as opposed to, say, Bloomfield or McKeesport.

Three years ago, when the Bank of New York came courting Mellon with a merger proposal, I was rooting for Mellon as the underdog. If the merger had gone through, the larger, out-of-town bank surely would have subsumed the smaller, homegrown one and thousands of jobs as well.

The merger eventually was called off. Mellon's then-president, Frank Cahouet, said the bank was financially strong, and that another huge job loss was not the legacy he wanted to leave when he retired the next year.

Still, we were on notice. The days of this storied local institution might be numbered. A bank in play once probably would be in play again. And more informed observers than I have noted that without its retail arm, Mellon will be an even more attractive, cash-rich target, ripe for takeover.

So all the corporate assurances that the remaining Mellon Financial Corp. isn't going anywhere should be followed by "yet."

Personally, I haven't banked at Mellon since the 1970s. But speaking as a graduate of Andrew W. Mellon Junior High School, who has attended plays on the Carnegie Mellon University campus, concerts at the Mellon Jazz Festival, and doctor's appointments in the Mellon Pavilion of West Penn Hospital, I'm as aware as anyone of the role the namesake institution has played in this region.

Not that I have any choice, but I am perfectly willing to give Citizens Financial a chance to be an involved corporate citizen that supports community organizations and events, even though its headquarters are far away.

As for how long it might take to rival Mellon Bank as an accepted pillar of the local establishment, that's guesswork. But if local activists ever do an encore of the infamous DMX protests of the 1980s and lock rotting fish in their safety deposit boxes, then Citizens will know it's getting there.

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