Ever since the nation's fourth largest bank bought Golden West Financial for $25.5 billion last month, Wachovia Corp. executives have sworn that the bank is done with dealmaking for a long while. However, on the same day reiterating its no acquisition stance until Golden West is integrated into the rest of the Charlotte, N.C.-bank, CEO Ken Thompson told Reuters that the company views the affluent Manhattan market as too expensive to organically expand its branch network. Well, if Wachovia can't afford Manhattan rents, then maybe it would be cheaper to acquire smaller New York banks. Buying community banks has worked well for the vast majority of New York's leading banks. JP Morgan Chase recently agreed to buy Bank of New York's retail branches furthering its lead as the city's No. 1 retail banker. British bank HSBC plc established its American beachhead entirely through acquisitions of the city's banks. Washington Mutual followed the same path. Now Wachovia is about to lose ground to another suburban rival as Philadelphia's Sovereign Bancorp, which competes with Wachovia in New Jersey, has established itself with the recent closing of its Independence buy. Despite its claims to the contrary, a New York acquisition isn't necessarily off the table if Wachovia expects to remain competitive in the country's richest banking market. —Matthew Wurtzel
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