Bank Branches Spared in N.Y. Bank’s Merger

In a move designed to deflect critics, Chemical Banking Corp. and Manufacturers Hanover Corp. said Wednesday that they will keep open about 85% of existing branches in low-income neighborhoods when the two banking giants combine later this year.

The banks’ plan to close 14 of 91 branches in less affluent areas shows how large banks are becoming increasingly sensitive to criticism of their community lending records, according to interviews.

It also shows the growing influence of neighborhood housing activists, who have long criticized large banks for ignoring the credit needs of low-income neighborhoods, housing activists said.

“This announcement illustrates the banks’ understanding that in the 1990s, they are obligated to pay attention to the social bottom line as well as cost savings and financial performance,” said Timothy Smith, executive director of Interfaith Center on Corporate Responsibility, a social advocacy group.

Earlier this month, NCNB and C&S;/Sovran Corp. unveiled a $10-billion, 10-year lending plan for low-income areas where the two banks will operate after merging to create NationsBank.

Alan Fishbein of the Center for Community Change in Washington, a community lending expert, said Chemical and Manufacturers were among large New York banks that came under fire for suddenly closing branches in the mid-1980s.

“I think they’re trying to put their best face forward,” Fishbein said of the announcement.

The New York-based Chemical and Manufacturers last month unveiled plans to combine into a $135-billion bank, which would become the nation’s third largest.