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Big banks cut prime rate
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September 30, 1998: 1:43 p.m. ET
Chase, NationsBank, others follow Fed's cut of short-term interest rates
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NEW YORK (CNNfn) - Several of the nation's top banks cut their prime lending rate in a chain reaction Wednesday, one day after the Federal Reserve cut short-term interest rates by a quarter of a percentage point.
Chase Manhattan Bank, NationsBank Corp. (NB), BankAmerica Corp., Banc One Corp., Wells Fargo & Co. and First Chicago NDB Corp. said they cut their prime rate to 8.25 percent from 8.50.
U.S. Bancorp kicked off the slew of cuts late Tuesday by dropping its rate a quarter of a percentage point to 8.25 percent.
Last week, Southwest Bank of St. Louis jumped the gun ahead of a Fed move and cut its prime lending rate to 8 percent from 8.50.
Tuesday's decision by the Federal Open Market Committee to cut the federal funds rate -- an overnight bank lending rate that is a benchmark for other short-term interest rates -- by 0.25 percentage point to 5.25 percent opened the door for banks nationwide to cut their prime rate.
Analysts expect virtually all of the nation's banks to follow suit in the next few days.
A BankBoston Corp. spokeswoman declined to comment on when or whether her bank will announce a similar cut. Citicorp officials were not available for immediate comment.
"Nearly all banks will cut their prime rate," said David Stumpf, an analyst at A.G. Edwards. "It's more of a marketing issue than a financial issue, because there aren't nearly as many loans tied to the prime rate as there used to be."
Banking stocks traded lower across the board at midday. Chase (CMB) shares were off 2-5/16 at 42-11/16; BankAmerica (BAC) shares slipped 2-1/8 to 60-1/8; shares of Banc One (ONE) fell 11/16 to 42-7/8; Wells Fargo (WFC) shares dropped 12-9/16 to 351-7/16; First Chicago (FCN) shares were down 1-3/16 at 68-7/8; shares of U.S. Bancorp (USB) shed 1-3/4 to 34-5/8; BankBoston (BKB) shares dropped 2-11/16 to 32-15/16; and Citicorp (CCI) shares fell 3-7/16 to 94-5/16. 
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