Financial analysts say the acquisition of M&I Bank by BMO Financial Group could have a dramatic impact on the Milwaukee banking market, but only time will tell how significant the effect will be.
The acquisition means the top three banks with the largest shares of the Milwaukee market are now based out of state: Chicago-based BMO Harris Bank; Minneapolis-based U.S. Bank; and New York-based JPMorgan Chase Bank.
That dynamic creates a huge opportunity for the top in-state bank, which is now Associated Banc-Corp, according to Thane Bublitz, a senior equity research analyst at Appleton-based Thrivent Financial for Lutherans.
“I expect that there will be some customers initially looking for a more local bank,” Bublitz said. “This is an opportunity (Associated) can take advantage of.”
Jon Bruss, managing principal and chief executive officer of Hartland-based Fortress Partners Capital Management Ltd., said M&I was an attractive acquisition even for a much larger company such as BMO because of its strong brand in Wisconsin.
“It’s low-hanging fruit in the sense that it is very inexpensive to acquire a franchise in Wisconsin whose reputation, though a bit tarnished, had been kind of the gold standard of community banks in Wisconsin for close to a century,” Bruss said.
Several Milwaukee banks have been gearing up for the BMO transition to take advantage of the opportunity, he said.
“It has the potential of being a game-changer,” Bruss said. “I think it’s a transformative acquisition as far as the Wisconsin market is concerned.”
Michael Goldberg, vice president and director and financial service analyst at Montreal and Levis, Quebec-based Desjardins Group, said BMO is collecting franchises to acquire a top-five market position in several U.S. cities.
“The addition of M&I just on its own looks like it would add about $200 million a quarter and on top of that there would be synergies that could be $60 million a quarter,” he said.
M&I’s wealth management and capital markets divisions also could add value to BMO, Goldberg said.
Observers should not underestimate the local presence the new BMO Harris Bank will have in Milwaukee, he said, since it now has more branches here than in Montreal.
“The Canadian banks … never went through the problems and issues that U.S. banks did,” Goldberg said. “I think that will be good for BMO and good for the Milwaukee market.”
Milwaukee-based Robert W. Baird & Co. analyst David George does not expect other banks to change their business models in response to the M&I acquisition.
Anytime a bank with a top market share changes hands, there tends to be some customer dislocation and concern that policies and procedures will change, creating opportunities for competitors, George said.
