WASHINGTON House Panel OKs Regulatory Relief
The House Banking Committee cleared regulatory relief legislation Thursday but set the stage for a brawl between rival industry groups and the congressional leaders who support them. "The small-business lobby is coming out in spades and saying this is a terrible bill," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America.
Rep. Bill McCollum of Florida was lifted from obscurity to real importance by the 1994 GOP election triumph. He is using his new status as a member of the House's ruling party to rewrite the nation's banking laws.
Photo: Bill McCollum leaning on pillar, front page
In a victory for lenders, the budget agreement reached by House and Senate GOP leaders, could undermine administration plans to take over the student loan market. Industry sources said the package requires that administrative expenses be included when calculating the cost of the administration's direct-loan program.
Loan growth will slow in coming months and drop significantly next year, predicted members of the American Bankers Association's Economic Advisory Committee. They don't expect a recession, however, and don't think banks are in danger from bad loans.
In an effort to win back enough Republican support to pass regulatory relief legislation, House Banking Committee Chairman Jim Leach moderated language restricting insurance powers of national banks.
19508 REGIONAL BANKING Bottom Line in 1994 Fed Top Execs' Pay
The interest rate and trading environment may not have been ideal in 1994, but that didn't keep the top officers at many large banks from taking home more than $1 million apiece in total compensation last year, according to a survey by the American Banker.
Profits jumped a healthy 15% last year at the nation's top 50 finance companies, but analysts predict that competition from banks, coupled with an economic slowdown, could mean less lusty growth in 1995. Analysts also said they expect some deterioration in asset quality as a result of the slowing economy.
Meridian Bancorp said it would take a $32 million charge to earnings in the second quarter to pay for a massive reorganization. The centerpiece of the cost-cutting is its planned elimination of 16% of the company's work force. Analysts called the reorganization painful but necessary.
Expanding its share of the South Florida market, NationsBank Corp. said it had agreed to acquire Miami's Intercontinental Bank for $208 million in stock, or 2.1 times book value.
Sanwa Bank climbed to No. 1 from No. 5, Fuji Bank dropped from being the world's biggest bank to the third-biggest, and Sumitomo Bank moved from No. 3 to No. 4 in a preliminary ranking by American Banker of the world's top 200 banking companies.
19592 COMMUNITY BANKING Demand for Funds Causes Liquidity Bind
With loan demand rising and deposit growth slow, community banks are scrambling for cash to lend, industry observers contend. Many have become net borrowers of overnight funds for the first time in years.
BankAtlantic Bancorp of Fort Lauderdale, Fla., emphatically stated that it's not for sale, which came as a surprise, because no one had thought it was.
Three months ago, William H. Allen Jr., chairman of Intercontinental Bank in Miami, said he would be "extraordinarily shocked" if it were sold within five years. But when NationsBank announced it would buy the bank, most observers were not surprised.
Bested in a battle with the press, Illinois' state-chartered banks must go back to running their call reports in local publications, though their national counterparts no longer have to.
19585 SMALL BUSINESS Wells in Nationwide Direct-Mail Drive
Wells Fargo has started what is believed to be the first nationwide push by a bank to market small-business loans by direct mail. Wells is using data base analysis, credit scoring, and targeted marketing techniques to identify the most attractive prospects.
19484 COMPLIANCE Simplified Reporting Of Suspect Dealings
Federal regulators have proposed dumping the criminal referral form that depository institutions now must use to report suspect transactions. It is to be replaced in October by a simpler and shorter form - the Suspicious Activity Report.
The Federal Deposit Insurance Corp. was scheduled to use the automated clearing house Friday for the first time to collect banks' and thrifts' quarterly deposit insurance premiums. The agency had been testing its new electronic debit process since March.
19590 CREDIT UNIONS CUNA Mutual Vows A Belt Tightening
Michael Kitchen, new president of CUNA Mutual Group, the largest provider of insurance products for credit unions, has sent a chill through its employees. He denies sweeping layoffs are imminent, but he says he's determined to chop costs.
U.S. Central Credit Union, stuck without a manager and desperate for capital, has been slapped with the government's second-lowest performance rating, sources said.
19260 CREDIT/DEBIT/ATMs Advanta, Scot Bank In U.K. Card Venture
Advanta Corp. and the Royal Bank of Scotland have entered a joint venture to establish a new company, RBS Advanta, to issue credit cards in the United Kingdom.
Card scams as a percentage of sales declined in 1994 for the second straight year, according to Visa International and MasterCard International. They attributed the drop to the continued success of new technology.
Electronic Data Systems Corp. has had great success harnessing ATM technology to distribute other companies' products. Some bankers are worried.
The dust kicked up by First Data's merger agreement with First Financial Management may never settle, judging by industry reactions. A consensus has emerged that, even if the terms change or another deal occurs, the credit card landscape has undergone a tectonic shift.
Visa U.S.A., entering the rock arena for a second time, announced that Visa Gold would sponsor Elton John's 1995 North American tour. The 24-city tour will feature the Visa Gold logo on tickets and stadium signage. June 26
19227 INVESTMENT PRODUCTS Washington Mutual Brokers Charged
Washington Mutual Savings Bank is living out a nightmare: Two employees of its brokerage affiliate - John E. Malosh and Christopher R. Millard - have been arrested and charged with stealing an elderly bank customer's life savings.
First Union Corp. was one of the most ambitious banks in retail investments even before it launched its bold invasion of the Northeast. And now that the North Carolina banking powerhouse is preparing to merge with First Fidelity Bancorp., its mutual funds and other investment offerings seem destined for even more prominence.
Swiftly staffing up for its Northeast expansion, First Union has plucked a top executive from Chase Manhattan Corp. to lead efforts to lure affluent customers. F. Daniel Prickett will join First Union July 10 as head of private banking, the Charlotte, N.C., banking company said.
19647 MORTGAGES Countrywide Pushes Replacing Thrift Loans
Mortgage companies are trying to snatch adjustable-rate loans right out of thrift portfolios as the market shifts toward fixed-rate loans. Countrywide Credit Industries has already mounted an aggressive radio campaign aimed at getting ARM borrowers to refinance and is beaming it into thrift strongholds such as Los Angeles, Phoenix, and Seattle.
Volatile interest rates are hazardous not only to servicing portfolios but also to lenders' pipelines. These loans, which have been committed but not closed, are subject to a variety of hazards that make risk control crucial.
Refinancing is being encouraged again because ARM payments may now exceed those for fixed-rate mortgages. The mini-boom also may be bolstered by those who missed the boat last time and by prospective Fed rate cuts.
Pennsylvania is the most recent state to demand that Norwest Mortgage stop selling its controversial low-cost substitute for title insurance.
The Department of Housing and Urban Development detailed for lenders its planned sale of rights to receive $240 million a year of mortgage insurance premiums.
19524 TECHNOLOGY Internet Touted As Nonbanks Gain
The Bank Administration Institute and Boston Consulting Group are urging bankers to get involved in interactive electronic services before nonbank companies lock in a permanent competitive advantage. They said banks can turn their customer relationships and trust to their advantage as they begin to explore business opportunities on the Internet and other on-line computer networks.
Executives at Affiliated Computer Services told institutional investors the company intends to sustain its rapid growth by continuing to diversify beyond the management of banks' core processing systems.
One column graphic: Outside outsourcing
Continuing efforts to expand its presence in wholesale transaction processing, Chase Manhattan agreed to buy J.P. Morgan & Co.'s commercial paper issuing and payment services business. Terms were not disclosed, but Chase stands to gain about 200 clients. Analysts said the deal fits a pattern Morgan has established.
Banc One is working with Open Market Inc. to install an electronic infrastructure that will allow merchants secure transactions over the Internet. Banc One officials said they intend to test the service early this month with RoweCom Inc.
A group of leading technology companies with an eye on electronic commerce has launched a venture aimed at securing financial transactions over the Internet. June 28
19542 FINANCE Nasdaq Bank Arbitrage Lifting Short Interest
Short interest in banking-related stocks traded on the Nasdaq market soared 22% during the month ended June 15, mostly because of arbitrage activity. Short players continued to concentrate on U.S. Bancorp in the wake of its agreement to buy West One.
Seeking to defuse public outcry over perceived abuses in the over-the- counter derivatives market, some dealer groups have drafted a code of conduct. But the proposals have come under fire from end users.
It will take more than big layoffs for Chase Manhattan to win the hearts of investors. After a published report that the bank plans 3,000 to 6,000 layoffs, Chase's stock barely moved last Tuesday. Investors appear to be awaiting bigger developments at Chase.
Duncan P. Hennes, managing director of treasury and funding, is responsible for reminding investors of Banker Trust's strengths despite the buffeting it has taken recently. He says rating agencies that have downgraded the bank have focused too much on bad news.
Photo: back page, Mr. Hennes June 27
In a deal that illustrates the issues of control and autonomy that arise when banks buy investment banking houses, Comerica announced the acquisition of W.Y. Campbell & Co. The deal came less than two years after Comerica's attempted acquisition of First of Michigan Capital Corp. failed because employees at the Detroit-based brokerage firm fled.