Banks: How Bigger is Better
By Robert Safian

(MONEY Magazine) – The latest round of bank megamergers--J.P. Morgan Chase's $58 billion proposed union with Bank One, following Bank of America's $47 billion merger with Fleet and Citigroup's continuing acquisitions--raises questions for consumers and investors alike. Fortunately, the answers are positive.

For consumers, bank consolidation introduces the specter of diminished competition and, with it, higher fees and fewer choices. But in fact, the quest for coast-to-coast banking plus the continuing launch of new local banks (often by downsized big-bank executives) has, if anything, heightened competition, providing enough choice to keep costs in line while offering many of us more convenience.

As for investors, these new financial Goliaths can make portfolio building that much simpler: If you want broad exposure to the financial industry, there's now no need to manage multiple stocks (or to contemplate a racy sector fund). You can get it all though a single solid, low-risk, high-yield financial stock in either Bank of America (BAC), Citigroup (C) or J.P. Morgan Chase (JPM). Spread your investment across all three for an extra measure of safety. (For more on investing in bank stocks, see page 45.) --ROBERT SAFIAN