WASHINGTON - Barnett Banks Inc.'s proposal to acquire in-state rival First Florida Banks Inc. has cleared antitrust hurdles virtually unscathed.

The Federal Reserve Board approved the application Wednesday after the Justice Department ruled that Barnett has to sell only four branches to ensure that the Tampa market remains competitive.

The divestiture - involving a scant $ 100 million in deposits - is significantly smaller than in previous rulings.

Some experts had expected that as much as $1 billion of the Florida companies' combine $33 billion in deposits would have to be sold to satisfy

antitrust concerns.

Fed Meeting Held

Approval by the Fed was the acquisitions last remaining hurdle. The deal was announced in May and is valued at about $867 million.

Jacksonville-based Barnett is the largest independent banking company in Florida, with $32.6 billion in assets. First Florida is second, at $5.3 billion. In between them are the Florida operations of three out-of-state superregionals: First Union Corp., NationsBank Corp., and Sun-Trust Banks Inc.

Concern about diminished postmerger competition centered on First Florida's home territory of Tampa-St. Petersburg. Barnett acknowledged that, after the merger, it will control 35% of the deposits in that region. Two-thirds of First Florida's branches are within one mile of a Barnett office.

In a letter last week to Fed Chairman Alan Greenspan, Richard L. Rosen, chief of the communications and finance section of the Justice Department's antitrust division, said Barnett had agreed to sell two of its branches and two of First Florida's in two Tampa-area counties. That satisfied antitrust concerns.

Issue: Market Domination

Barnett spokesman Robert Stickler said the company never thought massive branch sales would be needed.

"The issue isn't where your branches are," Mr. Stickler said Wednesday. "The issue is whether you dominate a market that is deemed to have inadequate competition."

Since 1990, Justice has zeroed in on several banking mergers, assessing their impact by analyzing market-share data, interviewing officers of merging and competing institutions, and interviewing customers.

While Justice Department officials said they adhere to quantitative and other guidelines, their interventions have added unpredictability to merger applications filed with the Fed and other agencies.

Huge BankAmerica Divestiture

BankAmerica Corp. had to agree to divest $3.4 billion in deposits and $1.7 billion in loans before Justice would approve its acquisition of Security Pacific Corp. this year. Just last week, First Bank System of Minneapolis agreed to drop one subsidiary of Bank Shares Inc., with $191 million of assets, from their merger agreement, to satisfy antitrust investigators.

"You have no idea ahead of time how Justice is going to react," said Mike Greenspan, a partner at Thompson & Mitchell in Washington.

Thomas Vartanian, a partner in Fried, Frank, Harris, Shriver & Jacobson, said the department knows it is difficult to prove a bank merger will significantly diminish competition because so many financial-services providers exist.

Learning from Experience?

"Justice is tied to old policies and principles that make them want to get some pound of flesh in in-market mergers," Mr. Vartanian added, however.

H. Rodgin Cohen, a partner in Sullivan & Cromwell, New York, who has had a hand in many major bank mergers, said the Barnett case is evidence that, after a "shakedown cruise," Justice "is clearly getting its feet on the ground."

The department is forsaking simple deposit-share analysis, he said, and is taking a broader, more realistic look at competitive effects.

The department is aware of overcapacity in many banking markets, Mr. Cohen said, and that it is easy to enter the business.

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