Wave of Bank Mergers Hits Securities Dealers

By Blake, Dan | THE JOURNAL RECORD, July 3, 1991 | Go to article overview
Save to active project

Wave of Bank Mergers Hits Securities Dealers


NEW YORK _ Slim profits have dwindled the number of securities dealers that trade directly with the Federal Reserve and a new wave of bank mergers stands to erode further the number of primary dealers.

Chemical Banking Corp. and Manufacturers Hanover Corp. each operate a primary dealership, but once they merge they would likely eliminate one of the dealerships to cut costs.

That would decrease the select group to 39 primary dealers from a high of 46 in 1988. In 1990 alone, the number of primary dealers dropped by five.

About a fourth of the primary dealers are subsidiaries of domestic banks. Analysts say the U.S. banking industry is headed for a new wave of consolidation as banks look to lower overhead while boosting capital and market share.

Primary dealers buy Treasury securities directly from the Fed and make their money by selling the bills, notes and bonds.

But intense competition has narrowed profit margins. Also, Fed requirements that primary dealers maintain a minimum daily trading volume in Treasuries takes capital away from potentially more lucrative investments.

Many firms have decided it is no longer worth the prestige that accompanies primary dealer status.

Westpac Pollock Government Securities Inc. surrendered its primary dealer designation last year after its parent company, Westpac Banking Corp. of Sydney, Australia, couldn't find a buyer for the dealership.

The company said the long-term outlook for the profitablity of primary dealerships scared away potential buyers and prompted the firm to get out of the business.

"For certain firms it's an advantage.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Wave of Bank Mergers Hits Securities Dealers


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?