ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, December 17, 1996 TAG: 9612170046
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
The Federal Reserve Board gave final approval Monday to NationsBank's $9.6 billion acquisition of Boatmen's Bancshares, a deal that creates a bank with 2,600 branches stretching from North Carolina to New Mexico.
The merger of NationsBank, based in Charlotte, N.C., with the St. Louis-based Boatmen's, forges a $228 billion giant in 16 states. The merger was announced Aug.29 and is expected to conclude in January.
The Fed, meeting in closed session Monday, approved the merger, but no details were immediately available, said NationsBank spokeswoman Pam McQuiddy. The Fed announced the approval in a 45-page order.
``Based on all the facts of record, the board concludes that the proposal is not likely to result in decreased or unfair competition, conflicts of interest, unsound banking practices, undue concentration of resources or other adverse effects,'' the Fed report said.
The combination will dramatically expand NationsBank's presence in the Midwest and make it the nation's fourth-largest banking company overall. With the deal, NationsBank's retail banking operations will expand into Arkansas, Oklahoma, Kansas, Iowa, Illinois and New Mexico. The bank already has a major presence in the Southeast.
In addition, the deal will combine the finance company subsidiaries of the two banks, giving the new NationsBank a presence in 38 states. NationsCredit, the finance company arm of NationsBank, by itself has $9 billion in assets and nearly 300 branches in 34 states.
NationsBank expects the newly combined company to earn nearly $3 billion in 1997. It predicts the merger will result in $335 million in annual costs savings by 1999 by reducing combined expenses by 5 percent.
The merger drew opposition from some fair-housing activists, while others supported the mega-deal. Matthew Lee, executive director of the Bronx, N.Y.-based Inner City Press, opposed the combination based on the lending record of NationsCredit, which he claimed was harmful to low-income people. Lee said his group, which also represents housing activists in New Mexico, plans to oppose the deal.
But other prominent lending activists, such as the group ACORN, supported NationsBank, based on NationsBank's outreach efforts to minority and low-income communities.
Hugh McColl Jr., NationsBank's chairman and chief executive officer, will be chief executive officer of the merged company; Andrew Craig III, chairman and CEO of Boatmen's, will serve as chairman of NationsBank Corp.
It will have the sixth-largest bank-owned asset-management business in North America, a lucrative business considering the boom in retirement funds and planning services. The banks will have a combined $23 billion of their own brand of mutual funds.
NationsBank will have a combined 15 percent deposit share across its franchise.
Under the agreement, each share of Boatmen's common stock can be converted into 0.6525 share of NationsBank stock. NationsBank intends to finance at least 60 percent of the purchase price paid in shares of NationsBank common stock, with the balance paid either in cash or stock.
Boatmen's shareholders are scheduled to meet Friday to approve the merger; NationsBank's shareholders will meet the same day, but only to consider issuing new stock for the deal. In late trading on the New York Stock Exchange, NationsBank's stock was down $1.12 1/2 at $92.25 a share. Boatmen's shares fell 56 1/4 cents to $60.06 1/4 on the Nasdaq.
LENGTH: Medium: 67 linesby CNB