Texas banks and thrifts have been given the go-ahead to sell insurance.

State Insurance Commissioner Jose Montemayor issued interim guidelines last week to undo state regulations barring banks and thrifts from getting insurance licenses. The guidelines are to take effect March 12, the same day as a new federal law eliminating the barriers among banking, insurance, and securities industries.

"These guidelines will blow the doors open to Texas banks offering insurance," said Ann Graham, a senior vice president at the Texas Bankers Association. "As soon as the new law is enacted at the federal level, we'll see the applications roll in."

Had Mr. Montemayor not acted, Texas' 759 banks and 51 thrifts might have had to wait until 2001 for the state Legislature to update its financial code. Texas lawmakers meet every two years and are not in session this year.

Texas is not the first state to give its financial institutions the power to sell insurance. Others, including Indiana and Minnesota, had enacted such laws before President Clinton's signing of the Gramm-Leach-Bliley Act last November.

But Texas is believed to be the first state to update its own regulations since passage of the federal law. States whose laws are not fully consistent with the new federal law - such as Ohio - now are working to follow the Lone Star state's lead.

"Texas right now is very much the leader," said Jeff Quayle, vice president and general counsel of the Ohio Bankers Association. "We're trying to put our best foot forward so that Ohio banks are on a level playing field and maintain their competitiveness with other states."

The Texas Legislature, however, still must address the insurance issue when it convenes next year. Regulators and banking lobbyists said they expect legislators to pass a law that varies little from the guidelines.

Meanwhile, the guidelines could encourage more deals like the one that International Bancshares Corp. of Laredo announced this month, said Karen Neeley, general counsel for the Independent Bankers Association of Texas. International Bancshares, a $5 billion-asset company, said it plans to join forces with two insurance agencies to offer their products in the company's branches.

"You're going to see a lot more courtships between banks and independent insurance agents," Ms. Neeley said.

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