Magazine article American Banker

A National Interstate Bank for Banks? That's What Westnet Aims to Become; Western Regional Group Gains Initial Approval from Federal Reserve

Magazine article American Banker

A National Interstate Bank for Banks? That's What Westnet Aims to Become; Western Regional Group Gains Initial Approval from Federal Reserve

Article excerpt

SAN FRANCISCO -- Westnet, a western regional banking group, has been given a preliminary green light to establish the first nationally chartered interstate bank for banks.

Westnet Bank NA, to be based in Denver, won initial approval this month from the Federal Reserve Board and should be in operation in August after clearing final regulatory hurdles, Westnet president Douglas Brown said last week.

The banking consortium currently provides discount brokerage services, a cash concentration network, a check guarantee acceptance program, and relocation services to assist in transferring bank accounts from one bank to another. Member banks are: United Banks of Colorado Inc., Denver; Bancorp. Hawaii, Honolulu; Valley National Corp., Phoenix Ariz.; and Wells Fargo & Co., San Francisco.

Establishing a national bank for banks is "a new organizational vehicle" that will allow member banks to take advantage of their combined resources as well as economies of scale, Mr. Brown said.

Westnet members already share a lockbox network that allows customer payments to be made to the nearest member bank. That bank instantly credits the payment to the appropriate company account at the other member bank, thereby reducing -- often by a day or two -- the delay in crediting payments.

As a bank, Westnet could simplify this process further because it would have direct access to the Federal Reserve's interbank settlement system, which handles checks and electronic entries, Mr. Brown said. …

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