Chicago correspondent stronghold sets sites on growth

Northwestern Financial Review, Mar 1, 2002 by Dullum, Justin

[chronicle]

A year after ABN AMRO announced a corporate initiative to maximize shareholder value, its Chicagobased subsidiary, LaSalle Bank, N.A., is beefing up its correspondent bank business. Already a major correspondent lender in the Upper Midwest, the bank is opening offices in Indiana, Minnesota, Missouri, Ohio and Wisconsin. Over the next several years, it will focus on Michigan in particular, said Wayne Veselsky, senior vice president for correspondent banking.

ABN AMRO, with $614 billion in assets and 3,500 offices in 70 countries, is focusing on growth, a goal toward which Veselsky said his department can contribute.

"Correspondent banking is a very growth orientated business. In the last five years, our deposit fees for balances are up 13 percent. Our loans are up 20 percent in the last five years. Growing in this market is not a scientific business. We have chosen to be here and with that, we have a commitment from everybody in the organization."

ABN AMRO has been reallocating capital and resources to businesses that show potential for higher returns. It is strengthening its presence in certain market areas, exiting a limited number of countries and cutting some retail operations. While the growth initiative was instituted after LaSalle had already begun branching throughout the Midwest, Veselsky said having an international corporation supplying moral and capital support is necessary to run a successful correspondent operation.

"There are only a few companies that can do this business effectively. The reason for that is you need a big infrastructure," said Veselsky. "Our fed funds are over $2 billion a day. We can do that because we don't need to go to the home loan bank or deal with retail deposits. And since our parent company brings with it an international focus, we can more easily do foreign exchange transactions and international letters of credit. Our international letters of credit are increasing 20 percent a year. That separates us from the rest of the market."

To attract correspondent business in new areas, LaSalle is emphasizing its stability, leveraging 70 years in the business as well as its on-going effort to recruit young college graduates for its lending program. So far the strategy has been working. "One of the great things we try to sell ourselves with to younger recruits is that in the last five years, we have had 22 percent growth. During that time, we have yet to take a credit loss," Veselsky said. "We've been very lucky in the correspondent department because we have a story to tell to the people who are coming out of the universities and our own credit school. We can tell them they want to be in correspondent banking," Veselsky said.

LaSalle's training program recruits roughly 50 college graduates a year from Big Ten schools for its twoyear training program. Students begin with 90 days of introductory instruction followed by two years of onthe-job training in LaSalle's loan philosophy. "We're getting out there and showing people that we are recruiting and grooming the next generation and that we plan to be in their markets for a long time," said Veselsky.

Maintaining good graces with the trade association is another aspect of LaSalle's strategy to remain in-tune with the industry. "Our chairman still goes to association meetings. It's a simple way for the customers to see that their business is important enough to us that we want to get out there and meet them."

From a service standpoint, LaSalle is focusing on credit, loan participation and check clearing. But can the market for these services handle another major player? "We never became the check-less society we were supposed to turn into 20 years ago," said Veselsky. "There's still 50 or 60 billion pieces of paper out there that need processing. These markets are still large and the service is still in demand and we think there is room all over for another player."