Wednesday, December 10, 1997

Justice Dept. approves NationsBank purchase of Barnett

By Antonio Fins / Sun-Sentinel, South Florida

FORT LAUDERDALE, Fla. -- NationsBank's purchase of Florida's Barnett Banks is all but locked in the vault.

Despite objections from consumer advocates, the estimated $15 billion deal was practically assured on Tuesday when federal and state antitrust investigators blessed the impending marriage.

The U.S. Justice Department nodded its approval after NationsBank agreed to sell $4.1 billion worth of deposits at 124 branches located primarily in the Tampa, Fla., area.

The state attorney general gave its OK, too, after tacking another three branches and $110 million in deposits to the divestiture list, mandated to preserve competition for financial services in Florida.

None of the branches to be sold were in Broward or Miami-Dade counties, but a handful were scattered across West Palm Beach and the Florida keys.

NationsBank, a $240 billion bank based in Charlotte, N.C., was more than happy to comply with the requests.

"We are pleased with the Justice Department's approval and look forward to completing the merger," said NationsBank spokesman Scott Scredon.

The acquisition, which would create the third-largest U.S. bank, still must win approval from the Federal Reserve Board. The board will consider the merger in a private session Wednesday; Fed officers are expected to approve the merger. NationsBank shareholders meet on Dec. 19 to vote on the deal.

On Tuesday, NationsBank was already busy dealing $2.5 billion in deposits to Huntington Bancshares even before investigators publicly released the divestiture targets. Huntington, based in Columbus, Ohio, bid $523 million for the deposits stored at 60 offices mostly in the Tampa area and the Gulf coast.

That deal followed the $935 million in deposits Barnett sold to SouthTrust for $160 million.

But the divestitures failed to quell the debate on the merger, the largest in the state and the second-biggest merger in U.S. banking history, and its impact on Florida banking.

Assistant U.S. Attorney General Joel I. Klein said in a statement that the sale of deposits would "assure that Floridians will receive the lowest rates on loans and the best service." He added the paring meant "the citizens of Florida would continue to reap the benefits of competition."

Klein noted the divestiture total was the second-largest amount the Justice Deptment has ever ordered. The biggest was the $8.8 billion selloff required in the Bank of America-Security Pacific merger in 1992.

In a letter to NationsBank Chairman Hugh L. McColl, Florida Attorney General Robert Butterworth reminded McColl of his pledge to freeze fees through September 1998.

Butterworth also said his office would closely follow potential lay-offs and branch closings as well as progress on community reinvestment programs and small business lending.

But consumer advocates said they were disappointed federal and state antitrust regulators did not force more divestitures -- between $5.6 billion and $10 billion total -- to strengthen NationsBank's smaller rivals.

The watchdogs said they fear that eventually fees will go up and that rates on small business and home loans will become less attractive.

"You would think the concentration of power would lead to efficiencies that are passed along to consumers," said Monte Belote of the Florida Consumer Action Network. "But actually what we have seen is that it creates an opportunity to raise fees even higher instead of sharing the wealth."

Belote, however, said he was glad that some NationsBank and Barnett employees whose jobs were in jeopardy would now be employed by Huntington.

And he added that FCAN would hold NationsBank to pledges not to close branches in low- and moderate-income markets.

Mark Ferrulo at the Florida Public Interest Research Group warned that the transition from two banks to one could be lead to lots of computer and data processing systems that could cost blissful customers.

"Consumers are going to have to be more vigilant then ever in in keeping track of their statements," he said.

Matthew Lee of Inner City Press, a New York group that protested the merger, said he was concerned that federal officials did not also force NationsBank to give up chunks of its small-business loan portfolio.

"Slick, slick, slick," he said. "The fact of the matter is they will still have a stranglehold on small-business lending which is already a problem area."

But others in the banking industry say such fears may be prematurely gloomy.

Alan Levan, chairman of BankAtlantic, pointed out that the Fort Lauderdale, Fla., thrift recently hired a top Barnett executive that handled small-business lending. "We expect to compete for that kind of business on a statewide basis," he said.

Levan, however, would not comment on reports that BankAtlantic had bid, but lost, for the branches purchased by Huntington.

Jeffrey Grady, executive director of the Community Bankers of Florida, said smaller community banks will still be able to compete.

"Small businesses and consumers like to deal with local banks because it's in those walls that decisions are made. You've probably heard that 100 times but that's because it's true," he said.

NationsBank, which trades under the symbol NB on the New York Stock Exchange, rose 75 cents to $73.75. Barnett, which trades under the ticker BBI also on the NYSE, closed at $62.75, up 62.5 cents.

---

(c) 1997, Sun-Sentinel, South Florida.

Visit the Sun-Sentinel on the World Wide Web at http://www.sun-sentinel.com/

Distributed by Knight-Ridder/Tribune Information Services.