Newspaper article THE JOURNAL RECORD

State Bankers Determined to Block Citicorp Application / Hearing Delayed

Newspaper article THE JOURNAL RECORD

State Bankers Determined to Block Citicorp Application / Hearing Delayed

Article excerpt

The Oklahoma Bankers Association is determined to prevent Citicorp of New York from operating a savings and trust company in Oklahoma, despite the overruling of its earlier appeal by the 10th Circuit Court of Appeals in Denver.

And the witness and exhibit lists submitted by the association in preparation for a hearing on the issue today before the Oklahoma State Banking Board were enough to cause Citicorp to request that the hearing be delayed until October.

In today's meeting, the board was to consider an application by Citicorp Savings and Trust Co. for a certificate of authority to engage in a savings and trust business.

Citicorp requested the delay because it did not find out about the scheduled appearance of bankers association witnesses until Monday, according to James A. McCaffey, counsel for Citicorp Savings and Trust.

"There was information presented by the OBA which indicated the use of several witnesses that we were unaware of," he said. "When we evaluated what it was, we decided to get together some information to respond.

"We've tried to keep the issue simple," McCaffrey said, "but it seems to become more and more complex - every time the application is considered, another issue is raised."

The issue is that an out-of-state financial corporation has purchased the dormant, statehood-established charter of an Oklahoma trust company and proposes to establish a savings and trust company which will accept time deposits and make loans.

Oklahoma bankers fear that the deposits will leave the state, draining dollars from the economy and bringing out-of-state banking giants one step closer to gaining a foothold within Oklahoma's borders.

The Oklahoma Bankers Association has continually fought the adoption of interstate banking by the state. In January, Governor George Nigh signed a bill prohibiting ownership of non-bank banks in Oklahoma, and stipulating that only bank holding companies may control Oklahoma Banks.

As part of its argument to be presented during the October hearing, the Oklahoma Bankers Association has included a complaint to the Board of Governors of the Federal Reserve System made Aug. 21 bythe Florida Bankers Association against Citicorp/Citicorp Savings of Florida.

In 1984, the Federal Reserve Board approved Citicorp's application for its subsidiary, Citicorp Person-to-Person Inc., to acquire New Biscayne Federal Savings and Loan Association of Florida.

The Florida bankers' complaint charges that:

- Citicorp, in violation of a Federal Reserve order, established unlawful branches in Florida.

- Savings institutions established by Citicorp in Florida illegally solicited deposits for the New York bank through advertising and referrals.

- Citicorp violated a Federal Reserve ban on affiliate transactions between the former New Biscayne institutions, Citicorp of New York, or any of its subsidiaries.

Citicorp Person-to-Person has had offices in Tulsa and Oklahoma City since 1973, resulting from Citicorp's purchase of Nationwide Finance, McCaffrey said. The firm makes consumer and second mortgage loans.

If approved, Citicorp Savings and Trust Co. will occupy the location now held by Citicorp Person-to-Person at 3817 NW Expressway, he said.

Laura Pringle, general counsel for the Oklahoma Bankers Association, said Citicorp has been accused of directly violating Federal Reserve guidelines.

"In Florida, they had specific directions from a regulator not to (remove deposits from the state), and they went ahead," she said.

"We have reason to believe they will" in Oklahoma, Pringle added.

Also included in the exhibits submitted to the banking board was an affidavit signed by Robert E. Harris, president of the Oklahoma Bankers Association, saying that representatives of Citicorp Savings and Trust Co. told him in 1983 that "it was not their intention to increase current lending of Citicorp in Oklahoma through Citicorp Savings and Trust. …

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