Wachovia Unit to Pass Along FDIC Rebate

Wachovia Corp.'s Treasury Services Group said it will pass a recent Federal Deposit Insurance Corp. rebate along to its corporate customers.

On Sept. 15 the agency refunded to commercial banks $1.5 billion of overcollected bank insurance funds.

Although banks are not required to share the rebate, Michael L. Starr, a manager in the Winston-Salem, N.C.-based bank's treasury services area, said, "We're passing this savings to our customers in the spirit of cooperation and partnership."

The refund stems from the FDIC's announcement last month that the BankInsurance Fund reached its congressionally mandated reserve target of $1.25 for every $100 dollars of insured deposits.

Although the target was reached on June 1, the achievement was not realized until three months after the fact.

The FDIC promptly returned the overpayments to banks and reduced commercial bank premiums.

Like most institutions, Wachovia had been passing on the cost of the premiums to its customers. It had been charging its wholesale customers 23 cents per $100 of deposits - the same premium charged by the FDIC.

The bank's new premium, assessed by the FDIC, is four cents per $100.

Wachovia will suspend charging its corporate customers for 15 months, after which time it will resume the charge at four cents per $100.

Bank officials deemed 15 months as an "appropriate" length of time to reimburse its customers.