Show Growth For Commercial Banks Bank ONE Philadelphia bank circumvented cir cir- Regulation Q of th the Fed by offering 20 million 7 per cent subordinated notes in denominations of to attract funds from the small investor This had proven quite successful and it was visualized visualized visualized visual visual- that these notes could be further utilized if money remained remained remained re re- tight However the Federal Reserve Board is considering closing this loophole loophole loop loop- hole by imposing a minimum denomination and a minimum maturity of five years per note The increase in the minimum minimum minimum mini mini- mum denomination of Treasury Treasury Treasury Treas Treas- ury Bills from 1000 to 10 10 should result in more deposits deposits deposits de de- posits for commercial banks as as the small investor loses what is considered the safest and most liquid form fonn of savings savings savings sav sav- ings other than bank deposits The be Feds Fed's ruling in late 1969 to allow banks to pay higher interest on time deposits proved to be too little too late LOWER INTEREST RATES EXPECTED The Research Staff of Babson's Babson's Babson's Bab- Bab sons son's Reports foresees a reduction re- re reduction reduction re re- in interest rates during during during dur dur- ing the year which should result in expanding deposits for all banks At the present time there are indications of some easing in the demand deman for loans However this is slight and the overall demand de de- demend mand mend is still brisk MANY BANKS would prefer prefer prefer pre pre- pre pre- fer to reduce the expensive borrowing they have hav done such as in Eurodollars than to expand loans This Ibis would improve liquidity and should mean better profit margins Another advantage of lower interest rates would be found in the bond portfolio of banks which would gain in value We are currently recommending recommending recommending mending for purchase Chase Manhattan Corp Republic National Bank of Dallas and Western |