THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, July 2, 1995 TAG: 9507010461
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
TYPE: Interview
LENGTH: Medium: 77 lines
The few remaining barriers blocking nationwide banking are about to fall.
Beginning in late September, a federal law called the Riegle-Neal Interstate Banking and Branching Efficiency Act will allow banks to cross states merely by opening a branch. The law will no longer require bank-holding companies to maintain a separate institution in each state where they take deposits.
A Virginia statute allowing the state's banks to exercise these new interstate branching powers took effect Saturday. Staff writer Tom Shean spoke with banking experts last week to determine how much of a difference the new law will make.
Who stands to benefit from the changes?
Virginia consumers and businesses may see some increase in the availability of credit.
However, the biggest beneficiaries probably will be banking companies like Crestar Financial Corp., Signet Banking Corp. and First Virginia Banks Inc. that own banks in more than one state. By consolidating their Virginia, Washington and Maryland banks, they may be able to save millions annually.
Under the new laws, bank holding companies like Crestar, Signet and First Virginia will no longer have to maintain a separate board of directors or keep a separate set of books in each state where they own a bank.
How will the new laws affect the availability of credit for consumers?
Competition for some types of consumer loans, including credit-card lending, is already nationwide. But the reduced cost of entering another state may prompt more banks to come into Virginia. That, in turn, could foster greater competition among banks for loans.
Will businesses notice any difference in the availability of bank credit?
Larger corporations in Virginia already have access to the national credit market. But some companies, especially smaller ones, may benefit from greater consistency in the supply of credit as more banks enter the state.
There may be fewer instances when banks promote particular types of loans and then change their minds and retrench.
How will bank depositors be affected by the new laws?
Most should not notice a difference. The coverage of bank accounts by federal deposit insurance, a concern for many depositors, has not changed. However, individuals who cross state lines frequently may find it easier to deposit money or write checks at an affiliated bank in another state. Although banks in neighboring states have shared the same name and were owned by the same company, they were considered separate institutions and required a depositor to maintain separate accounts.
Will the new laws affect the way banks in Virginia are regulated?
For those that are part of a bank-holding company doing business in more than one state, there may be changes.
Banks with national charters will continue to be regulated by the Office of the Comptroller of the Currency, a unit of the Treasury Department. But state-chartered banks that are part of banking companies doing business in more than one state will come under the scrutiny of only one state banking regulator.
The Conference of State Bank Supervisors has worked out a plan for sharing information about a bank that operates in several states, said Sidney A. Bailey, head of Virginia's Bureau of Financial Institutions and a member of the regulators' group.
What will the new laws mean for shareholders of Virginia banks?
The changes could make some Virginia banks more attractive to expansion-minded banks elsewhere in the country.
But that doesn't mean that acquiring banks will necessarily pay hefty prices for the institutions they buy. Some bank mergers that result in coming years could be ``mergers of equals'' that typically do not carry the hefty premiums that bank mergers often have.
What will the new laws mean for bank employees?
With a reduction in their reporting and regulatory requirements, banks doing business in more than one state will need fewer employees to handle operations of the same size. by CNB