A new Federal Reserve Board study contains good news for bankers interested in acquiring their competitors.

The Fed found that most local banking markets are still bristling with competition, despite a dizzying number of bank mergers during the past decade.

Fed economist Dean F. Amel, writing in the January Federal Reserve Bulletin, said banking markets in urban areas fall well below the level that raises antitrust concerns at the Justice Department.

Relying on the same formula that department uses to judge the competitive effects of mergers, Mr. Amel found that the average urban bank controls 36% of its market - up only slightly from the 1984 figure of 33%, and still substantially below the 42% threshold that springs the Justice Department into antitrust action.

The results are particularly surprising because the country's largest banks have substantially increased their share of deposits during the past decade. Mr. Amel found that the 10 largest banks boosted their share of all deposits by 67.8%, giving them 18.3% of the total market. In fact, the average deposit base of the 100 biggest banks actually increased.

Not all the findings were positive. Mr. Amel said rural areas became even more concentrated, with the dominant bank's average market share rising to 61% from 59% a decade earlier.

Mr. Amel said in the study that his findings support the popular notion that America is developing a dual banking system, with a small number of megainstitutions and a large number of moderate ones.

The study also found that credit unions have doubled - to 7.6% - their share of deposits, while thrift institutions have seen theirs drop substantially, from 35.4% to 20.6%

Mr. Amel credited the banking and thrift failures of the 1980s and the merger mania of the 1990s for much of the deposit concentration. He noted that from 1984 to 1994 the country lost 4,509 banks to acquisitions. He also found that only 99 of the 200 biggest banks from 1984 - and nine of the 25 largest - still existed a decade later

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