Companies Discount Antitrust Problems
The combined BankAmerica Corp. and Security Pacific Corp. would dominate several West Coast markets, but company officials said Monday that they were confident the proposed merger would not raise antitrust concerns.
"We do not at this point anticipate any antitrust problems, because there is a realization in Washington that banks have competitors who are not banks," BankAmerica chairman Richard Rosenberg told reporters at a news conference.
In California, the merged companies would control 43% of the deposits held by banks and thrifts insured by the Bank Insurance Fund, according to W.C. Ferguson & Co., Irving, Tex. The new entity would control 38% of the BIF-insured deposits in Washington and more than 50% of the state's bank deposits.
A Giant Presence
The market share would be even greater in some cities and counties. In Seattle, for example, the merged companies would have a 65% market share, analyst Jay Tejara estimates. King County, where Seattle is situated, "contains half of the state's economic mass," said Mr. Tejara, an analyst in the Seattle office of Dain Bosworth Inc.
California representatives of BankAmerica and Security Pacific said their companies are willing to divest certain operations if regulators ask.
In Washington, a Security Pacific officer said there's "a potential for problems" in several smaller towns where the combined BankAmerica-Security Pacific would be dominant. But the banker, Bruce Koppe, cited strong competition from thrifts and community banks, saying: "We're not looking at a couple of giants ruling the roost," in Washington.
Indeed, competition posed by thrifts, credit unions, and financial-services companies apparently has made regulators comfortable in blessing big banking concentrations.
"I have lots of confidence that competitors will rush into a market where someone becomes dominant and starts charging abnormal rates," W. Lee Hoskins, president of the Cleveland Fed, said in a recent interview.
Community bankers, thus far, seem muted in their opposition to big bank mergers.
Michael Clements, chief executive of the $55 million-asset North Sound Bank, Poulsbo, Wash., said he was "quite excited" about the BankAmerica-Security Pacific union, citing the closings of overlapping branches as beneficial to the market.
The executive, who is president-elect of the Washington Bankers Association, expressed confidence that his institution and its peers could hold their own. "As long as community banks keep providing good service, they will have a strong place in the market," Mr. Clements said.
The antitrust issue was gaining steam even before Monday's announcement by BankAmerica and Security Pacific. National City Corp., for example, stands to gain 56% of the bank deposits in the Ohio countries of Cuyahoga, Lake, Geauga, and Medina, should it prevail in the bidding for Ameritrust Corp.
The concerns raised in some quarters have to do with the pricing of bank deposit services and small-business loans - two areas where nondepository institutions often pose little competition.
"In-market mergers create the most concerns about stifling competition, and yet they are the most constructive in getting the banking industry out of its morass of overcapacity," said Michael Bradfield, the former Federal Reserve general counsel.