Why does Chase want banking customers?
The way Chase treats its retail banking customers makes me think they don’t really want them. In particular, in light of the fact that banking customers are a drain on profits lately and all the banks profits come from their trading and investment banking operations, why do they continue to run a retail bank and why in particular was Chase interested in Washington Mutual?
Why indeed? Because of banking capital requirements. Chase’s ability to make money depends on its capital, capital that it can leverage many times over to trade on its own behalf to make money. Hybrid investment/retail banks today make a lot of money trading on their own account, and capital is a very necessary part of this. Retail banking in particular is a cheap way to get capital that they can then use in their other operations, and when those operations become unhealthy, as they did for most banks in 2007-2009, they needed more capital to meet minimum required capital levels and to appear healthy.
So, Chase customers, you are really only there because Chase needs your money, not because Chase wants a banking customer.
Customer service | admin April 19, 2010
