Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.banks,americast.usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Mon, Sep 14 1992 Date: Mon, 14 Sep 92 04:32:03 EDT Message-ID: 09-14 0000 DECISIONLINE: Banking & Economy USA TODAY Update Sept. 14, 1992 Source: USA TODAY:Gannett National Information Network GERMANY TO LOWER INTEREST RATES: Germany will lower its official interest rates Monday, paving the way for rate cuts in the USA and around the world. The German move could lead the Federal Reserve Board to nudge rates lower, possibly as soon as early October. That would let U.S. banks lower the prime rate. The prime, now 6%, controls many consumer rates, including credit card and commercial loan rates. GERMANY GIVES INTO PRESSURE: Germany has bowed to international pressure and will lower its 8.75% interest rates Monday. It kept rates high to slow inflation. But the high rates created a stampede of global investors into high-yielding, mark-denominated investments. That has sent the mark soaring and the dollar plunging on world markets. "All Europe was stacking against the Germans," says economist Wayne Gantt. KEYCORP EASES INTO TOP RANKS: KeyCorp, a banking empire based in Albany, N.Y., has quietly transformed itself into an industry power, joining with such giants as NationsBank in pushing for coast-to-coast banking. And it's done it while sidestepping the rush eastward to expansion, focusing instead on Alaska, Wyoming and Idaho. Under Chairman Victor Riley, it has grown to having $23 billion in assets. (For more, see special Keycorp package below.) SANCTIONS TO BE SET UP: The Federal Reserve Board and the Federal Deposit Insurance Corp. next week will set risk-based capital ratios that will trigger sanctions against institutions that don't have enough capital. The move is part of the FDIC's Improvement Act of 1991. Also next week, the FDIC will make a decision on its formula for determining risk-based deposit insurance premiums. LOW RATES HELP WITH LOAN PAYOFFS: Low interest rates are helping consumers catch up on overdue loans, the American Bankers Association said Friday. Despite sluggish economic growth and rising unemployment in the April-June quarter, the percentage of loans 30 days or more in arrears declined to 2.6 at the end of June, the ABA's survey said. That was down from a 2 1:2 year high of 2.75% three months earlier. PRODUCER-PRICE INFLATION FLAT: Fruit costs shot up in August by the largest percentage in 20 years, but the weak economy held overall producer-price inflation to a barely perceptible 0.1%. The increase in the Labor Department's Producer Price Index matched the gain in July and, economists said, was a symptom of weak demand resulting from the near-standstill in the economy. WEEK'S MORTGAGE RATES DROP: The average rate on 30-year mortgages fell to a 19-year low of 7.84% last week following a reduction in a key short-term interest rate last week by the Federal Reserve. The rate was down from 7.94% a week earlier and the lowest since June 1973, said the Federal Home Loan Mortgage Corp. The rate had dropped to 7.87% in the week ended Aug. 21 but bounced to 8.01% the following week. JAPANESE ENTITY TO ACQUIRE LAND: An entity to be set up by Japanese banks will acquire land held by banks in its early activities, Jiji Press reported Saturday. The entity, to be formed by year's end, will acquire and dispose of devalued real estate assets held by banks and other institutions as collateral against nonperforming loans. Jiji cited industry sources in reporting that commercial banks' land will be easier to sell. SPECIAL PACKAGE ON KEYCORP: KEYCORP ESCAPES COMMON TRAPS: In steadily climbing to $23 billion in assets from $2.4 billion in 1981, Albany, N.Y.-based KeyCorp has sidestepped the traps that have ensnared many fast-growing banks. It never made loans to Third World countries or to Wall Street dealmakers, and it limited loans to glitzy commercial real-estate projects, banking's most recent Achilles' Heel. Instead, it takes a small-town approach. SMALL-TOWN POLICIES: KeyCorp lends mostly to consumers and small businesses. Its conservative lending policies and presence in towns such as Unalaska, Alaska; and Kooskia, Idaho; have given it an enthusiastic following on Wall Street. The 10 years ended Dec. 31, total return on KeyCorp stock was 810% including dividends, third among the USA's 50 top banks behind State Street and NBD Bancorp. IT'S STILL GROWING: For a bank with such a long reach, KeyCorp isn't all that big. Yet. Its $23 billion in assets make it the USA's 29th-largest bank. It will grow to about $30 billion and move up to 23rd largest when pending acquisitions are completed. KeyCorp has few problem loans. And expenses, once a bit high vs. other big banks, are being reined in as it uses computers to run its operations more efficiently. (End of package.) GOLD, SILVER DROP: Gold and silver prices fell worldwide Friday. On the Commodity Exchange, gold bullion for current delivery ended at $340.90, down $1.30. Republic National Bank put gold at $340.90, off 70 cents. Gold traded in London at $340.55, down from $342.30. On the Comex, silver bullion for current delivery settled at $3.679, down from $3.701. Silver traded in London at $3.69, down from $3.74. DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens at 3305.70 Monday after closing up 0.54 Friday. The New York Stock Exchange composite opens at 230.80, up 0.02. The American Stock Exchange market value opens at 386.45, up 1.64. The NASDAQ OTC composite opens at 583.01, up 1.77. 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Banking & Economy Editor: Beth Mann. (1-919-855-3491) Making copies of USA TODAY downdate (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM