JOHN CARUSONE – ‘Easy to understand’

It’s becoming a familiar scenario in Fairfield County: A nationally well-known bank with its headquarters in New York City or another, more distant city announces it wants a piece of Fairfield County’s sought-after market share. The bank acquires a regional holding company, or moves in and starts opening de novo branches.

Fairfield County always has been an attractive market – as evidenced by New York-based HSBC National Bank USA’s recent application to open a de novo branch in Stamford – but pieces of the market share are getting harder to grasp, even for the big dogs.

“It’s easy to understand the attraction to Fairfield County,” said John Carusone, president of the Bank Analysis Center in Hartford. The county is affluent and commercially dynamic, he noted.

But there are too many institutions chasing the business of too few households.

“The pace of new entrance, at some point, will have to plateau,” Carusone said.

HSBC filed an application with the state Department of Banking earlier this month to open a de novo branch at 7 Landmark Square in Stamford, and that is just the beginning. According to spokesman Stephen Cohen of HSBC, the bank does have plans to expand further in Connecticut. The move makes geographic sense, since the institution is one of the largest in New York State, he said.

The branches will be retail banking offices, but the bank does not plan to have a mass-market presence. Rather, it will focus on establishing a niche presence with commuters to and from New York, who are already familiar with the bank, and with Fairfield County residents who have international banking needs, Cohen said.

“Certainly it won’t be 200 [branches],” he said. “I think it will be what the market demands.”

The bank does have plans to open other branches in specific towns, but will not reveal the plans while waiting for regulatory approvals and real estate deals. Cohen did say he expects the first branch or two in Connecticut to be open by the end of the year, and that the bank likely will continue to grow in the state next year.

HSBC has 387 branches in New York state and 50 others in New Jersey, Florida, California, Washington, D.C., Washington state, Oregon and Pennsylvania.

‘Dance Floor Is Full’

HSBC’s strategy to become a niche bank might help the institution capture some market share, but ultimately, institutions that do not already have a presence in Fairfield County will face an uphill battle if they try to enter the market, according to Carusone. The institutions already there will have to fight tenaciously to maintain their market share.

“The dance floor is full by any measure,” Carusone said.

Bridgeport-based People’s Mutual Holdings, parent company of People’s Bank, continues to dominate the market, with most of the market share, according to statistics from the Bank Analysis Center. But out-of-state banks – New York-based J.P. Morgan Chase, Charlotte, N.C.-based Wachovia Corp. and Charlotte, N.C.-based Bank of America – followed closely behind. New York-based Citigroup and Toronto-based Toronto-Dominion Bank also hold relatively large chunks of the market share.

Prior to HSBC revealing its plans to expand in Fairfield County, several other banks announced expansions in the county and across the state. In July, Virginia-based Capital One acquired Long Island-based North Fork Bancorporation, which operates a bank in Branford, near New Haven. The bank’s chief executive officer named Connecticut as a state where the bank intends to continue growing its banking business.

Citibank, which already has branches in Fairfield County, announced in June it will open some de novo branches in Connecticut. Some will be in the Hartford area, but many will be in existing markets, which could include Fairfield County.

Last April, JPMorgan Chase and The Bank of New York Co. announced a deal last week in which JPMorgan is to acquire The Bank of New York’s consumer, small-business and middle-market banking businesses in exchange for JPMorgan’s corporate trust business, plus a cash payment of $150 million. That expanded the bank’s branch network in Fairfield County.