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Unwelcome Business

Your small bank's been bought by the not-so-jolly bank giant-now what?

This story appears in the December 2000 issue of Entrepreneur. Subscribe »

Q: The bank I've been doing business with for years was recently bought out by a large regional bank. All of my contacts have moved on, and I was recently invited by my newly assigned loan officer to find financing elsewhere, despite his admittance that my credit and payment records are excellent. Why are they doing this?

A: You've encountered what I've dubbed the "merge purge." A large bank buys out a small local bank, audits the portfolio and purges certain industries based partially on the lending experience of the banking officers involved. It's a sure bet that one of those officers views your industry as one with a high default rate, has compared your business to one he or she has seen incur losses in the past, and has decided to head off another possible default.

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