SunTrust's Spiegel Raps Regulators As Too |Tough' on Bank Mergers

WASHINGTON -- SunTrust Banks' chief financial officer, John W. Spiegel, in a speech Friday criticized bank regulators as overzealous and indicated they were acting "tough" to avoid criticism from Congress.

He suggested that the regulators may be inadvertently discouraging SunTrust or other banking companies from buying Miami's ailing Southeast Bank.

Mr. Spiegel, speaking at a Washington conference sponsored by Smith Barney, Harris Upham & Co., made no specific reference to Southeast. But he left little doubt that he feels his Atlanta-based bank is strong enough to come out a winner in the bidding contest for Southeast Bank -- despite any quibbles with the regulators.

"There is absolutely no question that SunTrust could turn around and buy a major Southeast bank if we wanted to," Mr. Spiegel said in his speech.

Regulation by the Numbers

Mr. Spiegel then went on to complain that regulators are overly concerned with doing things by the numbers rather than doing what makes sense.

"When you go sit down and talk [with regulators] theoretically about things you might do, they say: |Well, you're going to bring your capital account down,'" Mr. Spiegel said. "They really don't sit there and work as advocates for the banking system."

Mr. Spiegel said that making a large acquisition would not materially affect SunTrust's capital level. SunTrust has $7.36 in equity for every $100 of assets -- up from $6.90 at the end of 1990, he said. And that does not count SunTrust's 12 million shares of Coca-Cola stock.

|They Act as Policemen'

Referring to the regulators, he said, "They don't work to help you improve. They mandate and they act as policemen, checking off and being very severe." He added that the regulators are acting this way "because when they are challenged ... they need to say: |I was tough.'"

Mr. Spiegel would not officially confirm whether SunTrust submitted a bid for Southeast by the Federal Deposit Insurance Corp.'s deadline last week.

SunTrust, a $31 billion-asset institution with 37 banks in Florida, Georgia, and Tennessee, is widely regarded as one of the strongest companies interested in buying Southeast.

Barnett Banks, Jacksonville, and First Union, Charlotte, have also culled Southeast's books and are believed to have made bids.

The $12 billion-asset Southeast has lost money for seven straight quarters and is remaining liquid only by borrowing money from the Federal Reserve's discount window. The FDIC has told bidders that it would like to sell Southeast by the end of September.

(The Fed's lending from its Atlanta bank, the one Southeast uses, soared $130 million last week, to $530 million. While Southeast is not the Atlanta Fed's sole borrower, the bank is presumed to be a major reason for the rise in borrowings.)

Some Vagueness in Hints

In his speech, Mr. Spiegel gave conflicting signals about whether SunTrust wants to own Southeast. On the one hand, he said, in-market mergers make sense "because we can operate it efficiently. We can use our big structure of branches and so on and just overlay it."

But then he termed Miami "a strange market" in which SunTrust is pleased to have only a small presence.

Noting that an acquirer can never fully know a bank's loan quality before the purchase, Mr. Spiegel said problem loans uncovered after his bank's acquisition in Tennessee "scared us bad."

However, Mr. Spiegel said loan problems are not a concern when buying a bank from the government. "The FDIC gives you the ability to buy a cleaned-up bank," he said.

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