The Federal Reserve Board has ruled that BankAmerica Corp. may control more than 25% of a minority-owned bank in Alabama without regulators deeming it to be in control of the institution.

According to a legal interpretation released Tuesday, BankAmerica asked the Fed on Dec. 11 whether it could increase its stake of nonvoting shares in Commonwealth National Bank without running afoul of the Bank Holding Company Act provisions on corporate ownership.

Fed General Counsel J. Virgil Mattingly responded Dec. 18 that the investment was permissible, in part because BankAmerica agreed to lower its stake below 25% once Commonwealth stabilizes its capital position and attracts new investors.

"This shows some flexibility by the staff in a unique circumstances over a rule where the Fed is normally very firm," said Gilbert T. Schwartz, a partner in the Washington law firm Schwartz & Ballen.

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