GLOBALIZATION FELT IN RURAL AREAS, LEADING US AGRICULTURAL BANK SAYS

GLOBALIZATION FELT IN RURAL AREAS, LEADING US AGRICULTURAL BANK SAYS

The nation's leading provider of international banking services for U.S. farmer-owned cooperatives says the effects of globalization are being felt down on the farm.



CoBank, Denver, said five key trends in rural America are contributing to higher risk and a fiercely competitive business environment:

* First, the effects of globalization, caused by a trend toward more open markets and multilateral trade agreements, are being felt in rural America.

* Second, deregulation and the U.S. government's diminishing support for agriculture and rural America have resulted in more volatile markets.

* Third, biotechnology and information technology are changing the way Americans do business - from the Internet and wireless telecommunications to genetically modified seed and precision farming.

* Fourth, rural businesses are consolidating or partnering to gain economies of scale and greater marketplace dominance. Three-quarters of the nation's farm cooperatives are committed to a strategic alliance or joint venture.

* And, fifth, consumer demand for choice, price and service is driving competition and change.

''As a customer-owned bank, we make an ongoing effort to listen to our customers,'' said Douglas Dimms, chief executive of CoBank.

''Over the past year, we intensified our effort by interviewing more than 200 customers and prospective customers across rural America, from Fortune 500 food companies and commercial farmers to rural electric and telecommunications companies.''

CoBank's partner in the project was AgriBank, St. Paul, Minn., another bank in the Farm Credit System.

CoBank is owned by approximately 2,000 U.S. agricultural cooperatives, rural utility services, Farm Credit associations and other businesses serving rural America. The bank operates on a cooperative basis and, historically, a substantial portion of bank earnings is returned to the bank's customer-owners in the form of patronage refunds.

The bank offers cash investment services, letters of credit, leasing services, interest rate risk management services and online banking services.

CoBank has banking centers in Atlanta; Jackson, Miss.; Louisville, Ky.; Lubbock, Texas; Omaha; Sacramento, Calif.; Springfield, Mass.; St. Louis; Spokane, Wash.; Wichita, Kan.; and a national office and banking center in Denver. It also has representative offices in Mexico City and Singapore.

For more information, contact CoBank, P.O. Box 5110, Denver, Colo. 80217. Phone (303) 740-4051 or (800) 542-8072; or fax (303) 694-5824.

HERMES TO ACCEPT

RUSSIAN BANK GUARANTEES

Hermes, the German export credit agency, announced it will accept direct medium-term guarantees of Russia's Inkombank up to a total of $110 million.

Hermes raised the amount of guarantees for a single transaction to $11 million from $5.5 million.

Inkombank has financed 15 investment projects worth $43.5 million under Hermes coverage. It also has swap arrangements with the U.S. Export-Import Bank, Canada's Export Development Corp., OND of Belgium, ERG of Switzerland, EKN of Sweden and MITI of Japan.

Inkombank said it has attracted a total of $120 million of medium-term resources to the Russian economy as a result of cooperation with national export credit agencies.

PROJECT FINANCE KEY

TO ASIAN RECOVERY

Standard & Poor's Corp. said Asia's financial problems may have a greater effect on project and infrastructure debt than other sectors given that these financings have fueled much of the region's earlier, phenomenal growth, and will play a major role in any recovery.

''The current crisis is the first to hit after extensive placement of infrastructure debt with a wider circle of lenders - both institutions and syndicated lending banks,'' said William Chew, managing director of Standard & Poor's Infrastructure Finance Group and author of the CreditWeek report.

''While the crisis came as a surprise to many of these lenders, their continued participation will be critical, not only for Asian infrastructure debt, but for all infrastructure debt,'' he said.

Some of the project and infrastructure credits rated by Standard & Poor's have already been hurt by the crisis. Of the ratings in the region, six were lowered, and eight are either on Credit Watch with negative implications or have a negative rating outlook. This means further downgrades may occur during the next 30 to 60 days.

''Moreover, in this crisis, a few credits face significant potential for default on timely payment of principal and interest,'' Mr. Chew said.

Indonesian power projects, in particular, face a potential payment default, he said.

IFC INDEX ADDS FIVE

NEW EMERGING MARKETS

International Finance Corp.'s coverage of stock markets in developing and emerging countries has been extended to Croatia, Estonia, Latvia, Romania and Ukraine.

The five new countries have been added to the Frontier Markets index series, which now covers 18 emerging stock markets with a combined market value of more than $18.5 billion at the end of March.

The five new indexes include eight Croatian stocks with a market capitalization of $1.76 billion; 12 Estonian stocks at $950 million; 11 Latvian stocks, $208 million; 35 Romanian stocks, $802 million; and 17 Ukrainian stocks, $668 million.

NEW YORK FED PUBLISHES

COMIC BOOK ON TRADE

The Federal Reserve Bank of New York has published ''The Story of Foreign Trade and Exchange,'' the latest in a series of eight educational, comic-style booklets on economics and monetary policy.

The new comic book involves a mythical country called ''Jeansland,'' which has a comparative advantage in manufacturing jeans, to illustrate the benefits of international trade.

The booklet uses everyday language and colorful illustrations to explain forward contracts, the effects on trade of tariffs and quotas, the significance of foreign exchange rates, and the purpose of official foreign exchange intervention.

Up to 35 copies of the comic book are available free. Additional copies are 25 cents each, with exceptions for classroom use. To order, write to the Public Information Department, Federal Reserve Bank of New York, 33 Liberty St., New York, N.Y. 10045 or call (212) 720-6134.