European Stars and Stripes (Newspaper) - November 18, 1990, Darmstadt, Hesse                                The stars and stripes Page 13business news recession talk customers May feel Pinch keeps Dollar of military Banks losses of Keg Bleak the Dollar continued to slide last week in dupe falling nearly one pfennig against the Ger so Mark on Friday alone. Late Friday the Buck stood just under 1.47 on the Frankfurt Germany foreign sex arcs a Day earlier. The military Exchange rate by the weekend was set at 1.45 Marks for a Dollar ased on a mid afternoon Price fixing by Mer Ange Market after having flirted with 1.48 arks a Day ear a Quot Quot or the weekend1 ased on a mid Hants National Bank. In England the British Pound was Selling for 1,9665 late Friday. That a roughly the same Price a at which it started the week. One Factor weigh ing against the Buck is the widespread belief among economists that a . Recession will begin before Randy Mcclain years end. In fact ome say the recession has already begun. That message was brought Home recently by a prominent economic newsletter Blue Chip eco Omic indicators published in Washington. The newsletter surveyed 55 economists on the topic and found that 80 percent believe the Long feared Lump will Start this year while 5 percent see it starting Early in 1991. Small Comfort. The better news though is that the Blue Chip Urvey also found that three fourths of its respondents expect the coming recession to last no More Han nine months. Eighty two percent anticipate that the Down us will be relatively mild the newsletter said. Government economic reports issued out of Ashington last week were mixed but included thing to negate the a recession is near predict ions prevalent around the Globe. The worst of the . Figures probably was the report at midweek showing Industrial production America fell 0.8 percent in october. That was a bigger slump than most financial analysts had exacted and one More bit of evidence pointing to Ard hard times. On Friday the . Commerce department allowed with word that the nations Trade deficit arrowed slightly to $9.4 billion in september it the value of Petroleum imports reached their highest level in nine years because of the persian Ulf crisis. Currency traders said the report wont help the Ollar make gains in Europe or anywhere else for hat matter. David Simmonds economist with Midland Montagu Bank in London said the Trade report As actually a a Little worse than  he yes the Buck falling further in the next three months. The . Federal Reserve is still Likely to lower f rest rates in the United states to ease the flow j credit to businesses and Consumers alike As the ror mentioned recession approaches the British economist said. And that will Speed the flow of. National investors Money to Europe and Way from the United states. In jlmtet9e�an companies with big Export sales the i Jef states Are starting to scream about a a jw6 Jaras cuts into americans ability hot it heir products. But Simmonds said he Jis their corporate pain will Sway the German Wernent from its current economic course. Daimler Benz a maker of Mercedes Auto St Aid  that its . Sales were in first nine months this year and Var went11188 severely limited the Compa Dethlu but Simmonds said the German Bun f German companies to focus most the pm u a and sates on the Home front in teen in Fiat a satisfy Domestic demand and absorb a in in Check As Eastern Germany is absorbed and rebuilt by the West. Of a repast a Low of 1.40 Marks within next Var a a a 1,35 Marks for a Dollar by Early new year a is not at All  the Star and strip by Randy Mcclain financial writer army Germany a a military Bank customers Wor May soon be hit with higher fees for of serv Ces to make up for expected staggering losses in operating accounts this fiscal year. The falling Dollar budget cuts in Washington and the in ss6 a Al ens of thousands of troops from Europe difficult Mew t r yug a part in Makins this a s run the department of defense banking Pinch a of facials to Jagen Avys merchants National Bank has already announced plans to Institute a hiring freeze starting this died1 311 Belt tightening measures Are being Stu merchants has operated military Bank outlets in Germany the Netherlands and Greece under Dod  the Spring of 1988. The company took charge of military Banks in the United kingdom a year ago. A Glen Smith merchants executive vice president of military banking and James o. Smith newly appointed general manager in Germany said the hiring freeze will take effect As soon As Bank management consults with its workers. Under German Law some management decisions can Only be taken with the concurrence of employee labor relations councils but a hiring freeze can be put into effect without prior approval by workers. 1 the two merchants officials said the hiring freeze is necessary to avoid More drastic Cost cutting measures in the future including layoffs. A a we la do a lot of other things before layoffs a . Smith said. A a we la Cut Back on training and travel and supplies before we Ever get to the Point of wanting to Lay off personnel. A a we re also going to have to consider other reasonable Steps including some fee increases for certain services a said . Smith who oversees merchants military banking operations from the company a Headquarters in Indianapolis ind. A no part of the customer base will be insulated from fee increases he said. The Dod Bank last raised various fees during the summer. Check cashing charges for non account hold ers went up by $2 in june. Also the fee for changing dollars into Marks British pounds and other foreign currencies jumped to 2 percent per transaction As of Jan. 1. The old foreign Exchange fee had been 1.25 percent per transaction. In Germany the higher fee costs customers about 1 pfennig per Dollar. James Smith said the final decision on any fee increases will be made by the department of defense not merchants. A department of defense spokesman in Washington said no fee increases have been chosen at this stage. And he added that the process of singling out fees to increase has been complicated by the massive movement of troops from Europe to saudi Arabia. The official said banking services worldwide Are under increased pressure to slash operating losses in Large part because Congress Only appropriated $15 million to run the program this fiscal year. That appropriation is designed to pay for All banking operations in Europe Iceland and the far East. The Pentagon had sought $30 million to do the Job the spokesman said. A we have half a loaf and we Are scrambling to continue existing operations a he said speaking on the condition of anonymity. The Pentagon official said banking operations in Germany the United kingdom and South Korea Are under the most pressure in Large part because the Dollar has fallen drastically against those nations currencies in the past few months. In Germany for example officials said the military Bank a expenses increase by $500,000 every time the Dollar drops 1 pfennig against the German Mark. Merchants Bank employs a Large number of local National employees and pays out 55 percent of its expenses in Marks. A a we re experiencing the typical disadvantage of any Export import operation Quot James Smith said. A your income is in dollars and most of our expenses Are in  last year merchants officials said the Dollar Mark Exchange rate averaged 1.68 Marks but this fiscal year the Bank is expecting no better than a 1.50 Mark Exchange rate on average. On that basis alone merchants in Germany is facing the possibility of an additional $9 million operating loss in the year ahead. Officials in Washington said military banking worldwide has lost Between $15 million and a the Tow $30 millions in each of the past three years. Those numbers include the annual fees paid to banking contractors like merchants for running daily operations. A we Are Resolute in continuing the banking program but we have to look at a number of funding alternatives. That includes Cost reduction and Revenue enhancement measures a the Dod banking official said. . Smith said one alternative is to have the army air Force and Navy reprogram some of their appropriated funds to the military banking system. But the merchants official said he does no to know to what extent such help will materialize. Ironically the increased financial pressure on military banking operations comes Only a few weeks after merchants Bank in Germany turned a Small profit for fiscal 1990, the year that ended sept. 30. Traditionally military Banks in virtually every part of the world have been Money losers in need of appropriated fund support. However merchants in Germany turned a profit last year partly because of a hefty increase in its consumer loan income. James Smith said merchants will be hard pressed to repeat that performance this year. A the Bank is really Likely to have a loss with the current Dollar rate a he said. One positive sign in Germany according to merchants officials is that most service members deploying to the persian Gulf Are keeping their Bank accounts open. James Smith said several branches Are even experiencing an increase in new checking accounts opened by single soldiers. On the other hand the crisis in the Gulf is eating into merchants customer base especially in the Niernberg and Furth areas where the Bank is losing roughly 40 percent of its customers James Smith said. That situation could result in the need to Transfer employees from some branches to other areas where there Are More customers in the weeks ahead he said. Aloysius Wohlfahrt a works Council spokesman in Frankfurt Germany said employees Are willing to work with management to solve any problems but they done to want to be pushed around. A a we re not against reducing the number of employees via a hiring freeze but employee interests must be Well considered Quot Wohlfahrt said. If employees Are asked to Transfer to other Branch offices they should be compensated for longer travel times and be Given special training if their duties change he said. A of course on our Side we pre very cautious a Wohlfahrt said. A we want to have Clear  helping troops called for Gulf duty merchants National Bank has launched a special Effort to help service members deploying to operation desert shield get their financial houses in order before shipping out. Bank employees in areas where troops Are scheduled for deployment Are meeting with service members at special briefings at All hours of the Day to outline financial options. And in most cases service members done to have to visit a Bank Branch to open a new account set up automatic Bill payments of take care of other matters Bank officials said. James o. Smith general manager for the Bank in Germany said several branches have reported that Many new checking accounts Are being started by service members who want a Way to pay Bills while they re on duty m saudi Arabia. One Branch near Stuttgart Germany reported 220 new checking accounts opened in a single Day last week Many of them by customers who Hadnot used overseas banking services in the past. Merchants spokeswoman Yvonne Wise said the Bank is making an Effort to work with account holders including those who Are deployed to the persian Gulf on very Short notice. Checking and savings accounts with the Bank can be see Bank on Pago 14