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Katrina forces banks to divert operations

Southern financial institutions and a regional banking agency say they are working feverishly so customers in areas affected by Hurricane Katrina can get access to their money.
/ Source: The Associated Press

Southern financial institutions and a regional banking agency said they are working feverishly to ensure customers in areas affected by Hurricane Katrina can get access to their money as ATMs remain powerless and branches stay shuttered.

The Louisiana Office of Financial Institutions said on its Web site Thursday it is working with the Federal Deposit Insurance Corp. to publish a list of toll-free telephone numbers where customers can get information on how to access to accounts. The agency also said banks whose branches have been paralyzed were trying to set up temporary locations.

Telephone calls to the agency, which is headquartered in Baton Rouge, could not be connected. The OFI said in a statement dated Aug. 29 that many of the region’s banks have disaster plans in place to take care of back-office and check-processing operations.

New Orleans-based Hibernia Corp., the largest financial institution in Louisiana, switched most of its central operations to other offices outside of the state. The company advised on its Web site that customers could bank online to conduct many transactions.

In Shreveport, La., Hibernia has computers with older systems that were activated when power was lost in New Orleans. Hibernia also said it maintains additional space in the Shreveport area that can quickly be converted to a technology center to support operations routed from New Orleans.

The bank, which traces its roots in the region back to 1870, operates nearly 210 offices in Louisiana and about 110 in Texas. Capital One Financial Corp., the credit-card issuer that is buying Hibernia for $5.3 billion, said in a statement issued Wednesday that it will delay closing the deal for a week because of disruptions caused by the hurricane.

AmSouth Bancorporation said Wednesday it is offering disaster relief to its customers affected by the disaster. The Birmingham-based bank, which has branches throughout the storm-damaged region, said it is waiving fees for customers using other banks’ ATMs and allowing mortgage customers to skip payments.

The bank also said it is now offering special unsecured installment loans, along with business and personal loans, for those affected by Hurricane Katrina. Wachovia Corp., JPMorgan Chase & Co. and other banks also have made similar gestures.

The Federal Reserve Bank of Atlanta, which operates a New Orleans branch, said it diverted all operations to other offices within the system. The Fed office provides check clearing services for financial institutions in New Orleans.

But it wasn’t just large banks that were impacted by the hurricane. Community banks were also sent scrambling to maintain operations.

Whitney Holding Corp., parent of Whitney National Bank, said its senior management team temporarily relocated to Houston to continue operations. The bank — which has 130 branches in the Gulf Coast regions of Alabama, Florida, Louisiana, Mississippi and Texas — said branches in markets directly hit by the storm will remain closed until they are safe to open.

The New Orleans-based bank said its disaster plan calls for partner banks to complete computer and check processing in Chicago and Atlanta.

Hancock Holding Co., a Gulfport, Miss.-based bank with about 100 branches along the Gulf Coast, said its recovery team is “working around the clock” to maintain the integrity of its critical business operations. The company’s headquarters temporarily relocated to Baton Rouge for the duration of the recovery.

Investor jitters about what kind of financial toll Katrina will take on the smaller publicly traded banks sent shares lower in afternoon trading. Whitney’s shares fell 92 cents, or 3 percent, to $30 on the Nasdaq, while Hancock shares dropped $1.36, or 4.1 percent, to $31.35.