Striking Back

A bank joins the revolution

American bankers have watched in frustration in recent years while stock brokerages and other rival financial institutions have expanded into high-yielding money-market funds. Over the past three years, investors deposited an estimated $195 billion in these popular new savings plans, which pay high interest (recently an average of 13.9%) and operate much like a checking account.

Last week, however, San Francisco's Crocker National Bank, the twelfth largest in the U.S., announced that next month it will invade the turf of the money-market funds. Users of the bank's new Working Capital Account, which will require a $20,000 deposit to open and a $45 annual fee, will have a money-market account run by Boston's Massachusetts Financial Services. At the same time, they will be able to buy and sell stocks, bonds and other securities through Bradford Broker Settlement Inc., a New York discount brokerage. Customers can also use their accounts to obtain margin loans for investments.

Crocker Chairman John Place expects other banks to offer similar one-stop financial-service plans very quickly. Says he: "We just happen to be first out of the box." Britain's Midland Bank Group, which acquired 51% of Crocker in 1981, will provide most of the financing for the new venture. The British bank is pumping about $500 million into its American affiliate.

Place estimates that Crocker alone lost $700 million worth of deposits to the money funds in 1981. Says he: "We started to ask ourselves how we could compete with the funds and restore some of the customer relationships that have been eroded. We have one branch manager with a list in his drawer of 200 people who have gone to money-market funds but would come back if we had one of our own."

The new accounts are only part of the financial revolution that has been bringing widely different money services under one roof. Last week Sears, Roebuck and Co., the largest American retailer, announced that it will open financial-service centers in eight cities in July. The company now owns Dean Witter Reynolds securities and Coldwell Banker real estate. Last year American Express Co. bought Shearson Loeb Rhoades, the second largest securities firm, and the Prudential Insurance Co. acquired the Bache Group, the sixth biggest brokerage house. Banks will soon be in the thick of the financial fight.

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