All aim to serve organisations that cannot access traditional lending from commercial banks and each assume a majority of customers will be first time borrowers.

At Chemical, as at many large banks, the process of making a bank loan resembles a securities underwriting more than traditional lending.

The process not only solves the problem of where to obtain capital, but also teaches the borrower how to be a successful candidate for traditional lending.

But in addition to being keenly competitive, such fee businesses produce far more volatile results than traditional lending.

By the 1970's, when that job was completed, the banks had to find ways other than traditional lending to make money.

But he conceded that profit margins, particularly on traditional lending, were "narrower than in New York," where profits have become minuscule.

Moreover, many analysts praised Mellon's effort to expand out of traditional lending.

Searching for new forms of income, banks have been pulling away from traditional lending and seeking the steady fee-based revenues that mutual funds offer.

The weaker ratings could affect the banks' prospects for developing business both in traditional lending and in activities like derivatives.

At the same time, the amount of traditional lending has declined significantly.