Gov. Harry Hughes, hoping to quell industry protests about his agreement to grant New York's Citicorp broad banking powers in Maryland, proposed new rules today that would restrict most out-of-state institutions trying to set up operations in the state.
Hughes announced the new restrictions at a hastily called news conference. He said at one point the new rules were "tailor-made" for Citicorp, which hopes to win full banking privileges in Maryland in return for establishing a 1,000-employe credit card service center near Hagerstown.
The March 7 agreement between Hughes and Citicorp, which operates Citibank, has been the target of a fierce lobbying campaign by the Maryland Bankers Association, which contends the deal violates the spirit of a pending regional banking bill. The pending legislation would permit banks in 12 Southeastern states and the District of Columbia to purchase Maryland banks if those jurisdictions permit Maryland banks to do the same thing. After four years, Maryland's borders would be opened to full interstate banking.
The restrictions announced today presumably would affect banks in the regional compact, although the governor and his aides did not permit reporters to see the text of the proposed restrictions.
Hughes, saying he wanted "fair and reasonable" protections for Maryland banks, wants to require outside banks that want to do business in Maryland to first establish a limited-service operation in Maryland for at least two years before receiving full banking rights.
Citicorp, which now offers limited banking services in Maryland, would still get a head start of at least nine months on its competition under that new restriction, Hughes said.
"I don't get disturbed by the fact they get one year up on other banks," said Hughes, pointing to Citicorp's pledge to spend millions converting the site of a former Fairchild Industries airplane plant north of Hagerstown into a giant credit card service center.