Cheering the onset of interstate banking, corporate treasurers plan to consolidate their companies' accounts to save money.

According to a survey by Treasury Management Association in Bethesda, Md., businesses expect interstate banking to save them money on service charges and in time spent monitoring multiple banks.

More than 55% of the 516 companies responding to the survey said they will consolidate most or all of their company's business into banks they expect will soon be operating nationwide.

"When nationwide banking becomes a reality, corporate treasury managers plan to undertake significant consolidation of their banking relationships, a move that could have a major impact on the structure of the country's financial system," according to the survey findings. "The larger, multistate companies will substantially cut back the number of banks they use."

Community and statewide or regional banks, the survey report said, are likely to be dropped in favor of nationwide banks.

Companies with bank accounts in more than 20 states expect to save an average of $55,000 a month, while businesses with accounts in five or fewer states estimate savings at $2,500 a month, according to the survey.

Respondents also expect consolidation to cut down on staff time spent overseeing banks. Estimates of time saved ranged from a few hours to more than 130 hours a month.

Companies that use more than 100 banks expect to save an average of 133 hours a month, the equivalent of almost one full-time employee.

Those respondents make up 12% of companies surveyed. Nonbank financial services and retail are the industries that expect to save the most time.

When asked to choose the two biggest disadvantages of interstate banking, the largest group -- more than 37% - saw no disadvantages at all.

However, 28% saw a decline in customer service as the biggest negative while 27% worry most that bankers will be less responsive to local community needs.

Treasury Management said customer service problems were a greater concern of smaller companies with business facilities spread over a few states.

However, concern about community investment was cited by companies with both small and large multistate banking networks.

Other disadvantages cited by treasurers include reliance on toO few banks, 25%; fewer customized serviceS, 18%; not enough local banks, 16%.

Regional and statewide banks are expected to suffer the greatest decline in business, from 86% to 58%, as companies consolidate their accounts.

Community banks also will lose, dropping from 52% to 29%, TMA estimated. Even the smallest companies and those with facilities in the fewest states will use nationwide banks, the survey found.

The survey also found a wide disparity in the amount of banks businesses now use.

Almost half of the 516 companies use an average of 11 banks and have bank accounts in five or fewer states. But 20% currently have accounts in more than 20 states and use an average of 164 banks.

The c6nsolidation is likely to occur first with retail and energy companies, the survey found. Other types of companies represented in the survey include manufacturing, communications, insurance, and transportation. Thirty percent of respondents work for companies with sales between $1 and $4 billion.

While treasurers are clearly excited about the onset of interstate banking, qualitative factors will still affect a company's choice of bank, the survey said.

Almost two-thirds of the respondents said having a bank branch nearby will influence their selection of a financial institution.

A company's historic ties to a bank were important to 59% of the companies surveyed. Companies that use community banks were more likely to cite this as an important consideration, according to the survey.


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