As Coronavirus Spreads, Banks Face Tough Call on Branch Closures -- 2nd Update

By Orla McCaffrey

The coronavirus pandemic is forcing U.S. banks to begin closing branches indefinitely, an unprecedented measure that could curb the virus's spread but rattle customers who expect instant access to their money.

JPMorgan Chase & Co. said it would close 20% of its nearly 5,000 branches starting Thursday. The bank already had scaled back weekday hours at its branches. Capital One Financial Corp. on Monday closed about a quarter of its 461 branches -- about half in New York City -- to "minimize health risks from the coronavirus."

Truist Financial Corp. and PNC Financial Services Group Inc. will restrict branch access to drive-through lanes and appointments, except at some key branches that lack drive-throughs. Regions Financial Corp., Huntington Bancshares Inc. and Fifth Third Bancorp also plan to limit contact at branches to drive-throughs and appointments.

"We were having several dozen people in our branch lobbies, and we couldn't control it," said Huntington Chief Executive Stephen Steinour. "We had customers say they didn't feel safe with that kind of crowd."

As the coronavirus pandemic spreads throughout the U.S., banks occupy a unique position. They are among the few businesses deemed essential and not subject to government-ordered shutdowns.

Yet banks that choose to close must strike a delicate balance -- taking measures to keep employees safe while assuring customers they can access their money through a full slate of digital services or at a nearby branch. The greatest risk for banks is how the closures are perceived, industry analysts said.

"You can't separate people from their money and maintain the confidence of the person in the banking system," said banking analyst Dick Bove.

The top three federal banking regulators reminded banks last week that short-term shutdowns are permissible when the circumstances are out of their control. The Office of the Comptroller of the Currency advised banks to "provide alternative service options when possible, and reopen affected facilities when it is safe to do so."

Lightly staffed locations near other branches are easier to close. Those with drive-through lanes that put distance between customers and employees are more likely to stay open. Capital One said it prioritized closing locations that lack the lanes or protective glass to separate tellers from customers.

Community banks and those near early clusters of coronavirus were among the first to close branches.

Wintrust Financial Corp. said this week it would close or alter services at 50 of its branches in Illinois and Wisconsin. Heritage Bank, a 67-branch bank in Washington state, told customers that, beginning Wednesday, it would close all branch lobbies through the end of March.

Many banks are providing customer-facing employees with additional paid time off and advising high-risk staffers to stay home. Some are reimbursing child-care costs for workers dealing with school closings.

The decision to keep branches open is putting some workers on edge. At a Wells Fargo & Co. location in the Seattle area, more tellers than usual are calling out sick, according to a branch employee. Some higher-level staffers have been asked to fill in, handling transactions at the teller window and counting money in the back office.

The employee said his manager denied a request to work from home, even though his clients have canceled meetings and stopped walking into the branch. He said he is concerned about transmission because almost all staffers at his branch are in the office each day.

Wells Fargo stopped using many of its drive-throughs earlier this year as part of a push to encourage customers to use its apps and otherdigital services. A spokeswoman said the bank is using drive-throughs in some locations to limit interaction.

Wells Fargo said it is working to reduce the staff count at its branches, directing most employees who don't interact with customers to work from home and staggering shifts for customer-facing workers.

"We are following national- and local-government-issued guidelines, and we are providing regular updates to our employees as the situation evolves," the spokeswoman said.

Write to Orla McCaffrey at orla.mccaffrey@wsj.com

(END) Dow Jones Newswires

March 19, 2020 19:15 ET (23:15 GMT)

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