Deloitte to 'reengineer' 1st Maryland

BANKING & FINANCE

May 06, 1994|By David Conn | David Conn,Sun Staff Writer

Credit quality problems are largely solved, interest rates have stopped falling, and business borrowers are still few and far between. So how's a respectable commercial bank supposed to improve profitability?

Efficiency.

That's the conclusion reached by First Maryland Bancorp, parent of the First National Bank of Maryland. In January the company hired accounting and consulting firm Deloitte & Touche to begin a huge "reengineering" project that will touch just about every aspect of the Baltimore company's operations.

"It's a big project," says Ronald C. McGuirk, chief of staff and head of corporate planning. "It's a very big project."

He said about a half dozen top executives have formed a sort of steering committee to set priorities for the project, which was launched before former Chief Executive Officer Charles Cole retired this spring. That's left his successor, Frank Bramble Sr., running a bank that's about to undergo potentially far-reaching changes.

The Deloitte project will look at product development, delivery systems, operational areas and technology, the trust department and more, Mr. McGuirk said.

Depending on the recommendations reached by Deloitte and the executive team, the project could call for extensive investments as well as substantial employee retraining.

"We felt that our efficiency, while adequate, was not at the level we would hope it would be," Mr. McGuirk said, "and we wanted to sharpen things up a little bit."

The project has caused more than a little anxiety in the ranks. Mr. McGuirk said the changes may result in the need for reduced employment. "But we have no reason to believe that if it does take fewer people that it won't be taken care of through attrition."

Language barrier

The latest in a series of lessons on the value of reading the fine print comes from MBNA Corp., the Del.-based credit-card company that once was a subsidiary of the departed MNC Financial Inc.

An alert reader submitted a copy of a recent account statement he received from MBNA. In eye-straining type, it says that effective June 1, "an annual fee of $18 will resume posting in your account, in accordance with your original Cardholder Agreement."

Fair enough, especially if the original account agreement called for a fee to be imposed eventually. But here's the kicker:

It goes on to say that "If you do not wish to accept the annual fee change," you need only write to MBNA and tell them so, by May 26. It angered the recipient of the account statement that MBNA would try to hide in fine print the fact that this new fee was optional, as if anyone would opt to pay it.

But wait. The fee isn't quite as optional as it seems. According to Peter Osborne, a spokesman for MBNA America Bank, MBNA's main subsidiary, the fee was part of the original agreement, but "through [an] oversight on our part, we stopped billing them" two years ago.

Cardholders who choose to reject the fee, Mr. Osborne said, also will end up rejecting their credit card, although the fine print doesn't say that. "If they say they don't want the fee, they're saying they don't want the card," Mr. Osborne explained.

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