FEDERAL RESERVE BANKS ANNOUNCE CHECK RESTRUCTURING

            The Federal Reserve Bank of Kansas City, in conjunction with the other Reserve Banks throughout the nation, today announced a further streamlining of its check-processing services that will result in the Denver branch serving as a consolidation site that will begin processing checks currently handled by the Federal Reserve Bank of San Francisco’s branch in Salt Lake City. The change, which will be implemented in 2005 and early 2006, could mean the addition of as many as 20 employees at the Denver branch.

            "The management and staff of the Denver Branch are please to be selected as a consolidation site for check processing for the Federal Reserve System", said Pamela L. Weinstein, Vice President and Denver Branch Manager .  "We look forward to serving financial institutions in Utah, Idaho, and Nevada, as well as continuing to serve our current customers in Wyoming, Colorado, and New Mexico."

            In addition to 90 employees currently involved in check processing operation, the Denver branch provides cash services, bank supervision, community and public affairs services, regional input to monetary policy decisions, and support staff related to these functions.

            The announcement comes as part of a plan to restructure check-processing operations nationwide to provide greater efficiencies.  In recent years, the number of checks written has declined, as more people have shifted to electronic payment methods. Because the number of checks being processed and revenue from this business has decreased, it is more difficult for the Reserve Banks to meet the financial requirements of the Monetary Control Act of 1980.  That act requires the Reserve Banks to set prices to recover, over the long run, their total costs of providing payments services to depository institutions. 

            As previously announced in early 2003, the Reserve Banks are also currently undergoing a restructuring of their check operations from 45 to 32 sites by the end of 2004. Today's announcement further reduces that number to 23 sites by early 2006. The implementation schedule for this new round of restructuring changes will be determined within the next several months.  As a result of the restructuring, the Reserve Banks will reduce their overall check staff by slightly more than 270 positions.  In the offices where check processing will be eliminated, a total of 640 positions will be affected.   Also, as previously announced the Reserve Banks will continue to review their check processing operations each year and undertake further restructurings as necessary.

            The new round of restructurings will mean the transfer of check operations as shown in the following table: 

            To assist affected employees, the Federal Reserve Banks will offer separation packages, enhanced pension benefits for some longer-service employees nearing retirement, extended medical coverage, and career transition assistance.   

            The Federal Reserve Bank of Kansas City has approximately 1,500 employees at its main office in Kansas City, Mo. and its branch offices in Omaha, Denver, and Oklahoma City, with responsibility for a seven-state area that includes Nebraska, Kansas, Oklahoma, Wyoming, Colorado, northern New Mexico, and western Missouri.

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