Dime Savings Bank of New York is using a charity-based marketing strategy to attract discount brokerage customers.
The Dime Bancorp subsidiary's brokerage unit is donating to the American Red Cross 10% of the gross commissions it generates on stock trades.
The average stock trade reaps the brokerage about $75, said J. Edward Diamond, president of Dime Securities Inc.
"The strongest response to this is likely to come from an American Red Cross contributor who also trades stocks through the discount brokerage firms," he said.
Mr. Diamond said the bank is negotiating similar arrangements with other charities.
The "Give A Dime" program is meant to lure customers from Charles Schwab & Co., Jack White & Co., and other discount brokerages. Mr. Diamond said linking up with a charity gives him an edge over those competitors.
"Almost all of the calls we have had so far fit the profile of the current discount brokerage customer who feels no allegiance with a firm, and who would just assume make a contribution to a charity," he said.
The loss in revenues would have mostly gone to marketing the brokerage anyway, he said.
The program, which began this month, is scheduled to run for at least two years. Dime plans to promote it through direct mail, newspaper advertisements, and in-branch collateral materials. The money generated in the Dime program will go to the donor's local Red Cross chapter, said Martha Bernstein, director of development for the disaster-relief charity's New York City offices.
She said the Red Cross responds to nine disasters a day in New York City, particularly residential fires.
The $19.5 billion-asset Dime Bancorp operates 85 branches in the New York metropolitan area and one branch in Florida.