Verne Istock said last week that regulators might downgrade First Chicago NBD Corp.’s good rating for Year 2000 readiness.
First Chicago remains on schedule with its Year 2000 computer program, but regulators are getting stricter in their assessments, the chairman and chief executive told top executives at a senior management meeting Wednesday.
It is particularly important for banks’ computers to recognize the year after 1999 as 2000 rather than 1900, because their loans and other time-sensitive products are tied so closely to business operations and the economy.
“The bad news is that even though we’re doing a commendable job in meeting our deadlines, don’t expect any kudos from our regulators,” Istock said. “Under pressure from Congress, they are on a mission, just like back in 1990 when the regulators marched into our business and tried to tell banks how to classify loans.”
Indeed, the top regulator of the nation’s banks said in Chicago last week that the industry might see a drop in Year 2000 readiness ratings, at least in the short term.
“Over the summer and into fall, banks will be testing what they put in place to see if it works. The satisfactory ratings may dip a bit, but it should not be a cause for alarm. There is time to get those problems fixed,” Julie Williams, the acting comptroller of the currency, told a group of lenders at a conference Monday.
Sticking around: Istock also updated his executives on the bank’s planned merger with Banc One Corp. of Columbus, Ohio.
Technology challenges are probably the toughest issues, he said. But employees’ anxiety can get in the way, too, particularly in a merger of equals.
“Each side always seems to feel that it is getting more than its fair share of the bad stuff,” he said.
Istock acknowledged that some people are concerned that First Chicago is being bought by, rather than merging with, Banc One.
“That was also the case in the First Chicago/NBD merger,” he said. “And in hindsight, all that speculation or concern really didn’t matter. What mattered was melding our cultures and bringing our new team together. That said, I am absolutely convinced this is the right deal at the right time with the right partner.”
Istock said he plans to be a full-time chairman of the new firm, although Banc One’s John B. McCoy will be chief executive.
Istock is asked about that a lot.
“Heck, people are even asking my wife. And the short answer is: Yes, I plan on sticking around, longer than some of you may wish. I intend to be a full and active chairman.”
Housing issues: McCoy has found a condo on Lake Shore Drive. He sold his house in Columbus, although he plans to buy a smaller one there. He and his wife, Janie, also plan to build a home in Santa Barbara, Calif.
The West Coast house does not mean McCoy plans to retire anytime soon, Banc One executives say. It’s been in the works for some time, mainly because Janie is from California.
Istock does not have to jet so far to relax. His vacation condo is in Michigan.
Bank notes: Ed Tinsley, head of retail products at First Chicago, has been chosen to run Banc One Credit Co., which handles indirect lending and other consumer finance areas.
It had to happen. First there was gold, then platinum. Now First USA, the credit card giant owned by Banc One, is offering a Titanium MasterCard that “goes way beyond gold and platinum.”
