Banking Industry Cheers Ruling, but Analysts Foresee Little Impact
Wells, Rob, THE JOURNAL RECORD
By Rob Wells
NEW YORK _ The banking industry cheered a U.S. Supreme Court decision Monday allowing some national banks to continue selling insurance, but analysts said they doubted the ruling would make much immediate difference to banks' bottom lines.
Banks have been pushing for expanded powers to get into the insurance and securities brokerage businesses as revenues decline from traditional bread-and-butter operations such as commercial lending.
Bankers were trying to create a financial services supermarket in their branches where all consumer financial needs could be handled under one roof. The massive life insurance market _ with $9.98 trillion insurance in force by 1991 _ seemed to be a natural extension for the banking industry's vast branching network.
Only 300 banks nationwide are selling insurance, according to the American Bankers Association. Despite the potential, the business hasn't been a huge moneymaker for banks.
"I can't see any financial impact, even if they do it well," said Linda L. Stromberg, director of bank equity research at Howe Barnes Investments Inc. in Chicago.
The insurance industry is competitive and consumers have tended to shop around for better deals at large insurance companies specializing in personal lines insurance rather than opting for the convenience of a bank branch, said Ira L. Zuckerman, insurance industry analyst for SBS Financial Group Inc.
The court's unanimous decision, written by Justice David H. Souter, said a lower court mistakenly ruled Congress had repealed the rights of nationally chartered banks to sell insurance. …