I did not believe it when I read it this week, but Bank of America (BofA) is selling its share of the largest franchise of Pizza Hut – consisting of approximately 1100+ Pizza Hut restaurants across 28 states mostly in the Midwest and the South.
BofA acquired a portion of the pizza business in 2009 when it brought out Merrill-Lynch and expects to net somewhere between $630 million to $735 million dollars. Last week BofA agreed to sell its interest in Hospital Corporation of America for about $3 billion (with a B) dollars.
It seems like BofA is shedding its non-banking holdings in an effort to raise capital and get back to banking and to get out of non-banking businesses that they own.
Whether these two divestitures are tied to Bank of America’s decrease in its’ stock price over the past year or if the effects of Occupy Wall Street are also speeding up these sales by BofA remains unclear.
Either way, it makes sense to stick with what you do best (or worst in this case) and making pizza and hospital management do not seem to be a good fit for a banking corporation. BofA appears to want a large quantity of cash available to invest in the financial sector of Wall Street instead of managing hospitals and making pizza.
I also read that BofA and the other big three bank corporations have stated that they do not care about banking customers who tend to have smaller balances in checking, savings, or investment accounts and that is their choice, and maybe these customers are leaving because they are finally aware that banks truly do not care about middle class Americans and low income Americans.
In contrast, the big banks said that they are going to revisit the rules that permit credit unions to be in business to begin with. Why would they challenge the existence of credit unions if they are not being hurt somewhat by the exodus of customers from banks to credit unions? My educated guess, however, is that these banks are not telling the truth.
Big banks love their big, rich customers because banks can play with their money and make serious profits. However, banks also make a lot of money on fees and charges on the smaller accounts of average Americans. I am not talking only about bad check fees, I am talking about monthly charges and fees if accounts fall below a certain monthly minimum or monthly average. These account fees and charges account for hundreds of millions of dollars to the four largest banking corporations. I do not know about you, but hundreds of millions of dollars is nothing to sneeze at.
I equate the recent comments from big banks to a guy who says that he does not miss his ex-wife or that he is glad she is gone, when in fact he does miss aspects of the relationship – especially if it was the wife who did the leaving. A divorce does not always result in GOOD RIDDANCE – every divorce always has its’ share of plusses along with a bevy of minuses – and 600,000 customers taking their $4.5 billion dollars in four weeks from banks to credit unions is no small slice of pizza.
Finally, on Sunday on a business show, one spokesperson said that the banks would not know the details regarding customer counts and dollars of individuals closing bank accounts on National Bank Transfer Day until the end of the year.
To that I say, “BUNK”. I have been in IT for over 35 years and I have worked for bank holding companies, a national large fast food restaurant chain, a large HMO company, a large telecommunications company and a large insurance/financial services company and in all cases I ran queries against large databases to show sales, inventory, and customer information at a snapshot in time and on a moment’s notice.
I am sure that BofA and the other 3 banking giants IT departments gave their CEO’s and the Boards of Directors, via email or other electronic means, special ad hoc reports before midnight Saturday (if not sooner) that included exact numbers of account cancellations, precise withdrawal amount totals on a corporate level, along with the ability to drill down to the branch bank level as well.
They do not want to release those numbers because they do not want consumers knowing the effect of their collective actions.