BUFFALO’S BUSINESS
Don’t blame banks for credit crunch, Wilmers says
Bob Wilmers doesn’t see a credit crisis. He sees a confidence crisis.
“We’re out there every day,” looking to lend money and work with its customers, said Wilmers, who has built M&T Bank Corp. into one of the nation’s 20 largest banking companies since he took over a sleepy Buffalo-based bank 26 years ago.
The trouble isn’t so much that banks like M&T aren’t willing to lend, Wilmers said. The trouble is that M&T’s customers, and even the businesses that potentially could become M&T’s customers, aren’t looking to borrow right now.
“There is not much loan demand,” Wilmers said. “The demand is scarce.”
And that’s perfectly understandable, he said.
“If you had a business today, would you want to build another plant, given what’s going on in the economy?” Wilmers asked. “Companies are making less stuff . . . Sales are going down, and profits are going down. So people are hesitant to embark on new projects.”
So what will it take to break the cycle, to get the borrowers borrowing and the lenders lending again?
Wilmers won’t even go there. “That’s outside my pay grade,” he said, using a favorite phrase to dodge those big-picture questions he isn’t in the mood to discuss.
As the chairman and chief executive of M&TBank Corp., Wilmers has a unique position to view the banking crisis and its role in the nation’s longest-lasting recession since the end of World War II.
With much of its banking business based in its never-too-hot home markets in upstate New York, M&T, with a few costly exceptions, didn’t get sucked head-first into the risky, speculative lending that has so many of the nation’s banks in dire straits.
Yet M&Tis feeling the pain from the downturn all the same. Its profits fell 15 percent last year. Its stock, for a painful six-month period through the fall and winter, was transformed from a high-flying helium balloon into a lead weight, losing 73 percent of its value from mid- September through early March to bottom out at less than $30 a share. Its shares have rebounded sharply since then, yet M&T’s stock, which closed Friday at $52.73, still is less than half of its pre-crisis peak of $108.53.
Wilmers isn’t the only local banker thinking that way, either. A group of executives from a handful of smaller local banks stopped by The Buffalo News last week with the same message: Community banking is alive and well in the Buffalo Niagara region.
The perception, however, is much different. Local businessman Randall Clark was talking about the credit crunch with his fellow directors at the Amherst Industrial Development Agency a couple of weeks ago, and offered this view of the lending climate:
“The only loans that banks are willing to make these days are the loans that you don’t need,” he said.
So it’s clear that things are different in the world of finance. Marisa Lago, the president and executive director of the Empire State Development Corp., thinks banks now are taking “a more realistic view” of projects, after being willing to dabble in more speculative ventures for most of this decade.
The result, she predicted, will be that more projects will have to restructure their financing. Delaware North Cos.’ ambitious plans for a casino at Aqueduct race track fell apart last month because the company couldn’t line up financing.
So maybe it isn’t all the bankers’ fault. But they sure are stingier.
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