Editorial: Avoid pitfalls of bank merger

Thursday, June 11, 1998 | 10:32 a.m.

WILL it be better the second time around?

This week's announcement of Norwest Corporation's $34 billion takeover of Wells Fargo may not have rattled Wall Street, but it did unnerve Wells Fargo customers still smarting from its takeover of First Interstate Bank.

In 1996, when Wells Fargo took over FIB, customers large and small complained of service problems because of glitches in integrating the two companies' computer systems. They also were upset by the elimination of check guarantee cards and the reinstatement of service charges for nonprofit organizations that had been waived by FIB.

Simply put, FIB customers felt they had gotten the banking shaft. Many withdrew their accounts.

According to Sun Business Editor Steve Green, Wells Fargo officials promise to get it right this time.

We hope so.

Financial experts have their own opinions about giant mergers such as those that have swept the banking industry. Eventually, the market could be dominated by one or two players, they say.

Also debatable is the impact on customers. The plus side is that larger institutions can offer more diverse services. The down side is that convenient branches close and customers bemoan the loss of face-to-face contact with tellers.

The new bank will take the Wells Fargo name. How comforting that will be to Norwest customers who heard the horror stories from the FIB takeover remains to be seen.

Norwest and Wells Fargo will have to deal with banking regulations and tons of paperwork in completing the merger into the nation's sixth largest bank. The purpose of the merger is to combine assets and save money through increased efficiency.

But customers' needs shouldn't get lost in the shuffle. If extra care and measures are taken, the merger's goals can be accomplished with little disruption in service.

Wells Fargo knows the pitfalls to avoid from the FIB takeover.

Saving money makes sense. Hurting customers doesn't.