Will Safeway-brand banking register with shoppers?

Byline: Retail Notebook by The Register-Guard

CORRECTION (ran 2/15/02): Banking analyst Jay Tejera works for Ragen MacKenzie. A Retail Notebook item in Thursday's paper misidentified his employer.

BANK & BEANS: Would you put money in a bank with the same name as a grocery store?

The people at Safeway are counting on it.

Last fall, Safeway opened Safeway Select Banks in two of its Eugene stores. They're among the first Safeway-branded banks in Oregon.

In-store bank branches at grocery chains normally belong to Wells Fargo, Washington Mutual and other big banks.

Safeway, however, is trying something new: Get a banking partner that doesn't mind using Safeway's name.

Safeway's partner is Amicus Federal Savings Bank, a U.S. subsidiary of Toronto-based Canadian Imperial Bank of Commerce.

Safeway has provided its name while Amicus supplies employees, equipment and banking services. Amicus, for example, makes the loans and holds the insured deposits at Safeway Select Bank.

The two companies figure that Safeway's name will attract customers, along with the convenience of having a branch inside a store.

Safeway Select branches are small, often with one employee, and an ATM machine and computer terminal that let customers conduct electronic transactions.

The concept has grown to 120 in-store banks inside Safeways in Oregon, California and four other states. More branches are planned, including in and around Lane County, said Stacy Taylor, Amicus vice president of sales.

In Eugene, a Safeway Select opened at the West 11th Avenue and Bailey Hill Road Safeway, which until 1999 housed a Bank of America branch. The other branch is in the Coburg Road store, which previously did not have a bank.

Jay Tejera, a banking analyst with investment firm Ragen MacKenzie, said in-store branches can be profitable for banks, sometimes having $15 million to $25 million or more in deposits and $10 million to $12 million in loans.

But Tejera said he is skeptical of Safeway's new approach. A Washington Mutual branch in a Fred Meyer, for instance, will attract people who may not normally shop at Fred Meyer, and vice versa, he said, which benefits both companies.

Tejera's unsure that a bank called Safeway will have the same kind of drawing power. "Ideally, you want a co-branding operation (with) brand name equity" to attract customers, he said.

Taylor of Amicus counters that one name in the grocery-bank partnership is strong enough. "Safeway is such a longtime Northwest brand and when you talk to people about Safeway, they say it means value," she said.

Nearly 26 percent of Well Fargo's 3,007 branches are in supermarkets, many of them Safeways. It remains to be seen if Safeway Select Banks will displace many of the retailers' traditional banking partners, such as Wells Fargo.

"Our relationship with Safeway remains cordial and continues under the long-term (lease) contracts," Wells Fargo spokesman Tom Unger said. "They are a valued partner. On the other hand, just because we are in a Safeway doesn't mean we will be there forever."

Written by business reporter Ed Russo. Retail Notebook runs Thursdays. To include items, call 485-1234, Ext. 2359, or e-mail [e-mail].