Interstate banking old hat in Maryland


February 25, 1994|By David Conn | David Conn,Sun Staff Writer

Now that national interstate banking appears imminent, bankers in Maryland are reacting exactly as the situation demands: They're simply conducting business as usual.

The bill that passed the Senate Banking Committee Wednesday provides for a one-year waiting period before interstate banking would take place -- that's one year from an expected Memorial Day bill signing, assuming the legislation continues to move smoothly through Congress.

The Senate bill also calls for a two-year delay before companies may merge their subsidiaries into one multistate branch network.

What can Maryland bankers and customers expect from all this? Not much, according to industry members, analysts and consultants.

That's because Maryland has already joined the national wave of bank consolidations; in some ways this state has been at the forefront, as evidenced by the relative paucity of Maryland-based banking companies of any size.

"I don't think [the bill] fans the fires of consolidation in our market, because I think those fires are already burning rather strongly," said John Heffern, a banking analyst at Alex. Brown Inc.

The bill would save the super-regionals, such as NationsBank Corp., First Union Corp. and Mellon Bank Corp., millions each year and drop restrictions that have confined them mostly to the Southeast.

"This committee vote is one of the first positive opportunities in a long time to move the banking industry to a more competitive position worldwide," said local NationsBank spokesman Daniel Finney.

On the opposite end of the spectrum, small community banks and thrifts should be able to ignore the arrival of companies from California or Chicago -- if they ever come -- as easily as they've ignored the entrants from Pennsylvania, Virginia and North Carolina.

Finally the middle-tier companies, such as Baltimore Bancorp and Provident Bankshares Corp., may see a larger pool of prospective buyers.

On the other hand, as Mr. Heffern points out, this region hasn't exactly lacked for out-of-state takeover interest. The next likely shoe to drop, Baltimore Bancorp, has admitted it's in preliminary merger talks with at least three major banking companies, and it didn't need to go outside the Southeast to find them.

That's why Provident President Peter Martin says his company's position on interstate banking "is kind of boring -- we don't have a position. We don't think it's going to have a profound effect on us."

Lastly there's the consumer. When the walls finally come tumbling down, customers who choose to bank with multistate companies will be able to access any product or service in any state where the bank has branches.

"I think the real profound part is on the consumer side," said Baltimore private banker Stuart Greenberg.

Whether consumers will benefit from the banks' anticipated cost savings is a matter of debate.

"I think it's fair to assume that we would either pass cost savings on to customers or be in a position to not escalate costs as significantly in the event that costs rise in the future," said Mr. Finney.

Mr. Greenberg is a bit more cynical about the whole affair. "Banks are kind of greedy," says the former commercial banker. "I know they'll benefit, but will customers benefit?"

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