The Federal Reserve Board is scheduled to meet behind closed doors today to consider the merger of Chemical Banking Corp. and Chase Manhattan Corp.

The Fed is expected to approve the deal, the biggest-ever bank merger, and could announce its decision as early as this afternoon.

"We see no reason that it would not get approved," said Washington banking consultant Edward E. Furash, adding that "there may be some wrinkles and requirements which would include some divestitures to increase competitiveness in the market."

In deciding whether to approve a merger, the Fed must consider its effects on competition and its impact on banks' community reinvestment activities. Mr. Furash said that while Chase and Chemical already have good community reinvestment records, they are likely to agree to new low-income lending programs as part of the merger, to stave off continued protests from housing activists.

"Meeting these demands has become the price of mergers these days," he said.

Along with the Federal Reserve, the Justice Department and the banking commissioners of New York and Delaware must approve the deal.

Chemical and Chase plan to consummate their merger - creating the country's largest bank holding company with assets of about $300 billion - on March 31.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.