BankAmerica To Sell Deposits As Part of Merger
SAN FRANCISCO - Bank-America Corp. plans to sell billions of dollars in deposits in three states to satisfy antitrust concerns raised by its proposed acquisition of Security Pacific Corp., industry sources said.
The San Francisco-based company hopes to unload roughly $1 billion of deposits each in Washington and Arizona - a large portion of the two banks' operations in those states.
Potential Bidders Contacted
Divestitures in California could be nearly as large but would comprise a smaller fraction of the companies' overall operations in the state.
BankAmerica has already contacted potential buyers but is waiting for regulators to approve its divestiture plan before circulating formal bid packages, sources said.
A BankAmerica spokesman confirmed the company is hammering out a divestiture plan to satisfy regulators, but he declined to disclose details.
The huge market shares that BankAmerica and Security Pacific would jointly have in Washington, Arizona, and California raise questions of undue concentration that must be settled before their merger can be completed.
Planning the Sales
BankAmerica has been negotiating antitrust issues with the San Francisco Federal Reserve Bank, which has first-line jurisdiction over the merger. Talks have centered on how to apply the so-called Herfindahl Index, a complicated formula for measuring market concentration.
The parties have finished wrangling over definitions of geographical market areas but have not yet agreed on the locations of branches and amounts of deposits that must be sold, industry sources said.
Although analysts expect BankAmerica's divestitures to be significant, they do not foresee fundamental changes in the company's postmerger market position. Many deposit and branch sales will be in small towns and rural areas.
The biggest branch sales will probably be in Washington State, where BankAmerica and Security Pacific, respectively, own the first- and second-largest banks. With a total of 375 branches, the two banks would hold nearly half of Washington's commercial bank deposits.
Analysts expect BankAmerica to sell $900 million to $1.7 billion in deposits, or about 5% to 11% of BankAmerica and Security Pacific's combined deposits in Washington. In discussions with the state attorney general's office, BankAmerica proposed to sell 39 branches and $1.3 billion in deposits, said R. Jay Tejera, an analyst in Seattle for Dain Bosworth Inc.
Branch sales would be concentrated in rural areas where bank competition is weakest. But significant divestitures would also be made in the Seattle area, where BankAmerica and Security Pacific together hold nearly 60% of total bank deposits, analysts said.
Potential bidders include U.S. Bancorp, Portland, Ore.; Key-Corp, Albany, N.Y.; and Puget Sound Bancorp, Tacoma, Wash. - respectively, the third-, fifth-, and sixth-largest banks in the state - analysts said. Two Minneapolis banking companies, First Bank System and Norwest Corp., might also bid.
In Arizona, analysts said, they expect sales of branches in Phoenix and Tucson, the state's two major metropolitan areas, as well as in small towns. The units of BankAmerica and Security Pacific together hold about 35% of the state's bank deposits.
Norwest, which has a minor presence in the state, is considered a possible bidder for BankAmerica's Arizona holdings.
California branch sales would be mainly in small towns, although some Los Angeles-area offices may go on the block, sources said.
BankAmerica will also become prominent in Nevada after it completes a merger with Las Vegas-based Valley Capital Corp., parent of the state's second-largest bank. But branch sales apparently will not be required because of a large thrift presence in the state.