Crestar Woos Customers From Banks 1st Union, Wachovia Are Buying

Inspired by its trust department, Crestar Financial Corp. will launch bankwide customer service guarantees next week as part of a campaign to attract customers from its competitors.

The $22.8 billion-asset Virginia bank will soon go head to head against out-of-state powerhouses like First Union Corp. and Wachovia Corp. To compete, it is promising to pay cold, hard cash to customers who are disappointed.

First Union plans to close its acquisition of Richmond-based Signet Banking Corp. by the end of the year. And Wachovia's purchases of Richmond- based Central Fidelity Banks and Charlottesville-based Jefferson Bankshares are pending.

"What better time to put money where our mouth is?" said Craig J. Kelly, group executive vice president in charge of strategic marketing for Crestar. "Right now, with all these other banks going through all this trauma, it will really stand out."

The Richmond-based bank is no stranger to service guarantees. Since 1994, its trust department has offered to pay back a year's fees to clients who express dissatisfaction.

If that experience is any indicator, Mr. Kelly said, there is no need to worry that Crestar will spend too much on the guarantees. The trust department, he said, has paid back "next to nothing."

Crestar is publicizing its guarantees and other services in a series of advertisements that are set to be launched Monday. The campaign is directed at customers of acquired institutions.

Mr. Kelly joined Crestar in March from Banc One Corp., which this year began offering service guarantees to its trust clients. Comerica Inc. and PNC Bank Corp. have similar programs on a limited regional basis.

Mr. Kelly would not disclose the cost of running the ads in newspapers and later on television.

The guarantees in the campaign are for loans and checking, deposit, and small business accounts opened by the end of this year. Refunds will be made only within 90 days of opening an account.

Dissatisfied checking customers can get $50, and angry mortgage borrowers could be paid $200. Crestar said it will pay back disappointed small-business owners twice the amount they were charged.

A forthcoming television spot for Crestar cash guarantees shows a banker explaining, "I am not stupid. I know there are other banks. I know you have choices. I know you can leave." The bank is running a separate campaign to align the bank's image with baseball great Cal Ripkin Jr.

Meanwhile, Winston-Salem-based Wachovia is planning to run ads in Virginia next year, a spokesman said. A comprehensive First Union advertising campaign that started in February is continuing in Virginia and other states where the Charlotte, N.C.-based bank operates.

Ad campaigns in the face of merging competitors do bring in new customers, according to David J. Totaro, executive vice president and chief marketing officer of Dime Savings Bank, New York.

Dime ran cash guarantee ads when the old Chemical Banking Corp. merged with Manufacturers Hanover Corp., and Mr. Totaro said it may do so again.

"The most successful way to attract new customers is during life- changing events," he said. "One of the most significant life events today is when your branch is being closed or acquired."

Some observers are not so sure about using cash guarantees as a promotional tool in banking.

"I don't think people really listen to it, nor do I think people take advantage of it if they're not pleased," said Nancy Bush, an analyst at Brown Brothers Harriman. "I just think they tend to leave."

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