Roanoke Times Copyright (c) 1995, Landmark Communications, Inc. DATE: TUESDAY, December 28, 1993 TAG: 9312280079 SECTION: BUSINESS PAGE: A-5 EDITION: METRO SOURCE: The New York Times DATELINE: LENGTH: Medium
Under a plan approved last week by the Federal Reserve System, the Charlotte, N.C., company was allowed to give discounts on stock brokerage commissions to customers who keep minimum balances on deposit.
First Union spokesman R. Jeep Bryant said the change will affect Virginia customers, but he did not know the date when the new policy would be put into effect. First Union is parent of Roanoke-based First Union National Bank of Virginia.
The Fed granted the bank an exemption from a 1970 law meant to prevent banks from restricting their lending to those who buy other services. In 1990, the Fed let banks offer discounts on credit cards to depositors.
First Union, the country's ninth-largest banking company, owns banks in eight Southeastern states and a large discount-brokerage subsidiary.
In its order, the Fed said the market for brokerage services was "national in scope and highly competitive" and noted First Union has a very small share of the market.
Therefore, the Fed wrote, "it is unlikely that First Union will be able to substantially lessen competition for brokerage services in a particular market."
The agency, a chief regulator of federally chartered banks, said it would consider in January a proposed regulation to let all banks offer similar discounts.
First Union said it had not determined what sort of discount it would provide or the minimum deposit necessary to receive the discount.
While the ruling applies to a minor aspect of a relatively unimportant banking product, banking lawyers said the Fed's move could have a somewhat broader effect.
"The real importance of this may lie in the Federal Reserve's willingness to consider exemptions to this statute," said Rogdin Cohen, a lawyer who worked on behalf of First Union. "The statute covers a number of arrangements that everyone would consider pro-competitive and pro-consumer."
Staff writer Mag Poff contributed to this story.
by CNB