Chevy Chase to Close Giant Store Branches

Chevy Chase Bank is closing 54 mini-branches in Giant Food stores across the Washington region, ending a decade-long initiative to add banking to customers' shopping lists.

The closings coincide with the expiration of a 10-year contract that Chevy Chase Bank signed with Giant. The shutdowns will begin next month, according to W. Scott McSween, executive vice president for retail banking at Chevy Chase Bank.

Chevy Chase originally sought to put branches in supermarkets to expand its footprint in the region, attract customers and make it easier for them to do their banking. But the concept never really took off.

Bank executives said many customers are now more comfortable doing their personal banking online and at ATMs than when the arrangement began. And others prefer visiting the stand-alone bank branches, with their brick exteriors and carpeted floors, rather than trying to make important financial decisions just a few steps from the check-out aisles.

"This is examining what customers have told us loudly and clearly," McSween said. "And our customer preferences indicate that we should spend more resources in traditional branches, online banking and ATMs. We would like to keep these supermarket branches open, but we do not have an infinite amount of money to invest."

McSween said the decision was not a reflection on Giant; the mini-branches made some money for Chevy Chase and brought in new customers.

"This has been a very productive relationship for both parties, and Giant has been an excellent partner," he said.

Chevy Chase, based in Bethesda, is negotiating with Giant in an effort to keep the bank's ubiquitous ATMs in the supermarkets. Chevy Chase also has ATMs in Harris Teeter grocery stores.

A spokesman for Giant said the grocer wants to keep banks in its stores.

"We are looking forward to transitioning to another banking partner," Jamie Miller said. "We have been having discussions with other banks."

Each of the mini-branches in Giant Foods generally take up about 300 square feet and are manned by about four Chevy Chase Bank employees. The workers will be reassigned, McSween said.

Chevy Chase and Giant have had to pare back operations in recent months as the economy has slowed and competition has heated up.

Chevy Chase, for instance, plans to close 14 percent of its branches after going on an expansion tear that left it with the most outlets (240, not including Giant branches) and the most ATMs (1,093, including Giant ATMs) in the greater Washington region. It is the largest, locally owned bank in the area, employing more than 4,500 people who serve more than 1 million customers. The bank is privately held by the B.F. Saul family and has $15 billion in assets.

Since that boom, the bank has reallocated resources as the housing downturn and other economic factors have squeezed the financial sector. It reduced banking hours and laid off employees last fall even as it aggressively battles the likes of Bank of America, SunTrust and Wachovia. The bank is spending millions to upgrade its ATM network.

Giant, based in Landover, had been one of Washington's homegrown corporate icons for decades when Royal Ahold of the Netherlands bought the grocery store chain for $2.7 billion in 1998. It remains the largest chain in the area, operating 183 supermarkets in Virginia, Maryland, Delaware and the District and employing about 21,000.

But it, too, has felt pressure from competitors, and its share of the market regionally has dropped 5 percentage points in three years.

In recent months, Giant has closed underperforming stores, announced plans to cut $500 million in costs by the end of 2009 and slashed prices to woo customers. It is spending millions over the next three years to renovate 100 aging stores. Giant recently hired a new general manager to run the region's stores.