Special Coverage: ABA Card Convention
The struggle between banks and nonbanks for credit card supremacy shows no signs of abating, according to American Banker's annual card industry survey. Banks as a group continue to lose market share, and their competition keeps getting more numerous.
September 11
19748
Much of what banks have learned in marketing credit cards can be helpful in mutual funds and other investments, experts say. But selling funds also presents some unique challenges.
September 11
19760
Many large credit card issuers have stepped up securitization, but investor worries about credit quality have forced them to strengthen their reserve mechanisms. "There is evidence issuers have been moving down the credit spectrum," says one expert.
September 11
19792
The industry applauded an Environmental Protection Agency decision to clarify lender liability for environmental cleanup. "This is a giant step in the direction we've always needed the EPA to go," said the ABA's senior counsel.
September 11
19800
WASHINGTON
Bank Profits Hit Record $12B in Second Quarter
Bank profits hit an all-time high of $12 billion in the second quarter, the Federal Deposit Insurance Corp. reported, and Chairman Ricki Helfer said there was no reason to expect a downturn soon.
September 13
18161
Legendary banking lawyer John D. Hawke Jr. has returned to the limelight as Treasury under secretary for domestic finance - the Clinton administration's point man on issues affecting the financial services industry. He may understand banking better than anyone else who has ever held his job.
September 11
19790
Despite double-digit loan growth in the first half, two government reports show bank credit quality still strong. Industry observers attributed the paradox to intense jawboning from regulators, the strength of economy, and nightmares from the last recession.
September 14
18221
The logjam that stymied regulatory relief legislation this summer is breaking up - but for larger banks eyeing new insurance powers, the price of progress seems likely to be high. The legislation had been held up for months by insurance agents who opposed an amendment to let banks and insurance companies affiliate in most states. But key House Republicans are expected to drop the amendment.
September 13
18172
Fleet Financial Group announced plans to provide $208 million for community reinvestment programs in Connecticut. The move is part of a deal with the state, which had threatened antitrust action on the planned Shawmut merger.
September 12
18115
REGIONAL BANKING
UJB to Buy Summit In $1.2B N.J. Deal
Two New Jersey companies announced a $1.2 billion merger agreement, but Wall Street was not enthusiastic. UJB Financial, which agreed to pay 2.4 times book plus some shareholder dilution for Summit Bancorp., insisted that savings and 26% market penetration in the state would make the price worthwhile.
September 12
18135
Because of massive merger dislocations, the new Chase might have a hard time holding on to corporate customers, some analysts say.
September 11
19783
In his first year as chairman and CEO of First Bank System, John F. Grundhofer fired 2,000 people and replaced 19 of the top 20 managers. But the hatchet-man image has faded during the past three years as Mr. Grundhofer has built a model superregional.
September 13
18158
Washington Mutual is reporting some success with its year-old effort to market free checking. The aim is to add customers and try to sell them other products.
September 14
18194
COMMUNITY BANKING
Small Banks Gain Share In Texas Fed District
Though small banks are losing market share to their larger competitors nationwide, the reverse is true in the Fed's 11th district, which comprises Texas and parts of Louisiana and New Mexico.
September 14
18196
Farm banks resist tacking fees on to their services, and even the most profitable of them credit extraordinary circumstances rather than aggressive fee strategies.
September 11
19778
At least half of the highly regarded leadership team at Intercontinental Bank of Miami is set to work for the bank's prospective new owner, NationsBank.
September 12
18093
Ken Tepper, head of a nascent Philadelphia holding company, is out to prove that Bill Gates and those who think plain-vanilla community banking a dinosaur are wrong. After all, he says, the Microsoft chairman doesn't take deposits or know how to underwrite loans.
September 11
19784
CB Bancorp in Michigan City, Ind., has carved out a correspondent banking niche buying loans from mortgage banks with agreements to sell them back later.
September 13
18163
SMALL BUSINESS
Securitization Tail Seen Wagging the Lending Dog
With securitization looming, lenders that originate small-business loans will have to be sensitive to emerging standards for credit scoring and documentation, writes David N. Bernstein of Furash & Co.
September 12
18108
COMPLIANCE
Natwest Spies Opportunity In New York's South Bronx
Natwest Bank has been winning praise and customers for helping renovate New York's South Bronx. "We're just taking disciplines of good banking and applying them to community development," says senior vice president Susan Rice.
September 14
18181
Inasyst software in use at Minnesota banks and being tested by federal regulators is meant to reduce the burden and cost of bank exams.
September 14
18212
The new "suspicious activity report" - the filing banks will use to alert federal officials to questionable transactions - will not be ready on Oct. 1, as had been expected. Fed officials said it won't be available until December.
September 14
18214
CREDIT UNIONS
Debate on Study Linking CEO Pay to Membership
A survey showing that compensation of chief executives is closely tied to membership size is stirring debate in the industry.
September 11
19762
The planned merger of Chemical and Chase could provide New York's 30 community development credit unions with new opportunities for expansion. The new Chase, expected to close 100 branches, could win CRA by giving some of them to financial cooperatives or leasing them at favorable terms.
September 11
19776
The credit union industry is in an introspective mood. The National Credit Union Administration is organizing a conference for the fall of 1996 that will focus on how to reach and extend services to poor people. Meanwhile, the Credit Union National Association has invited credit unions to participate in a review of its structure.
September 11
19775
Competition is pushing more credit unions to enhance their credit cards. Only 700 of the 5,600 that offer cards tack on rebates, travel insurance, airline miles, or other bells and whistles, says a trade group executive, but that number will double in the next 30 months.
September 11
19774
CREDIT/DEBIT/ATMs
Toys R Us Chooses A Cobranding Partner
Bank of New York Delaware is issuing a Toys R Us Visa credit card, which will reward consumers with toys, clothes, and points toward free meals, discounted cruises, airline tickets, and hotel stays.
September 15
18265
PNC has joined the NYCE regional electronic banking network, becoming the largest bank to do so since Citicorp last year.
September 15
18264
Bankers at the national bank card conference in New York may have felt as if they'd made a wrong turn onto the information superhighway. Though for years credit cards have been banks' biggest and most consistent source of profits, the ABA was no longer content to put on just a card conference.
September 14
18222
American Express has pulled off another striking partnership, announcing that it will issue a cobranded Optima card with Hilton Hotels.
September 13
18151
Bank-card pioneer D. Dale Browning has been named president and chief executive of Procard, the Colorado-based marketer of procurement-card programs.
September 13
18155
INVESTMENT PRODUCTS
Waivers of Fees Said To Undermine Revenues
As banks waive management fees to help draw fresh assets into their fledgling mutual funds, they may also be waving goodbye to the promised revenue that motivated their ventures. The difference between what prospectuses let banks charge and what cusomters actually pay could amount to more than $150 million a year, according a consultant.
September 12
18131
Amid a flurry of merger rumors in the investment products marketing industry, one name repeatedly mentioned as a takeover target is Independent Financial Marketing Group.
September 12
18119
With banks merging right and left, the firms that execute their brokerage transactions are jockeying for position. Mergers are reducing the number of bank brokerages.
September 11
19750
An NASD official acknowledged that the group erred when it imposed a blanket ban, later eased, on bank advertising related to bank-brokerage operations. The official also promised that a new set of rules on bank broker-dealers will take industry concerns into account.
September 15
18255
MORTGAGES
Big Fleet Commitment To Conn. Home Loans
Fleet Financial Group is launching mortgage programs with a big piece of the $207.5 million it is committing to Connecticut under an agreement with the state's attorney general.
September 14
18208
August originations at Countrywide Funding and North American Mortgage far outpaced those of a year earlier. Executives credited expansion efforts and a hardy housing market.
September 12
18095
GE Capital Mortgage said that despite a drop in wholesale lending in the first half, it has no plans to exit the business. It said its volume has already rebounded.
September 14
18206
Originators are likely to see business fall off as computers take over many of the tasks they have traditionally performed, a PaineWebber analyst says.
September 11
19765
TECHNOLOGY
Intuit-Microsoft Fiasco A Blessing in Disguise?
Scott Cook, founder of Intuit, says the breakdown of its merger deal with Microsoft was a lucky break after all. Banks are lining up to use his company and its Quicken software in their home banking programs.
September 15
18241
The Chemical-Chase merger would create one of the nation's largest providers of corporate banking services. But not surprisingly, many consolidation issues would have to be resolved before the new Chase could fully flex its wholesale muscle.
September 11
19769
Perot Systems' unusual technology alliance with Swiss Bank Corp. is expected to benefit both.
September 12
18100
Surfing the Net has won wide popularity among providers of financial products and services. Lawyer Steven J. Eisen offers a whirlwind tour of the Internet, explaining how it is used, and what it has to offer.
September 14
18217
Michigan National said it is capturing check images at a remote processing site using a new system from IBM.
September 13
18162
FINANCE
Chase Deal's Catalyst Cuts His Bank Holdings
Michael Price, the activist shareholder credited with triggering two of the largest bank mergers of the year, has drastically reduced his bank holdings, he told American Banker. Bank stocks have surged so high on takeover speculation that there is little value left in the sector, said Mr. Price, whose surprise investment in Chase helped push it toward its $10 billion merger deal with Chemical.
September 11
19801
Less than a week after putting a "trading buy" on NationsBank, Brown Brothers Harriman analyst Nancy A. Bush reluctantly downgraded it to "neutral." The revision came as shares bounced back from a slide that followed the announcement of a proposed takeover of Bank South.
September 13
18173
Will interstate banking ultimately reduce price competition and boost profits for the banks that survive? The Texas experience suggests that it will not. In a market now dominated by large multistate banks that bought out failed Texas institutions, the supposed pricing benefits of oligopoly have yet to materialize.
September 12
18111
First Union chief executive Edward E. Crutchfield Jr. is ready and willing to defend his bank's history of acquisitions. They are absolutely necessary for the superregional to compete against nonbanks, he said at a conference.
September 14
18216
Rating agencies and investors think most bank holding companies are weaker than their banks, so holding company debt carries higher yields than bank debt. Whether the difference is justified has become a subject of debate among fixed-income analysts.
September 14
18220
