The Federal Reserve Board has given Banco Santander of Madrid permission to acquire Banco Central Hispano of Puerto Rico.

The Fed, in an Aug. 1 order, rejected charges that the deal would allow Banco Santander to dominate small business lending in San Juan and Aguadilla, Puerto Rico. It said Banco Santander would control a large share of the market, but it said neighboring banks and thrifts could easily enter the fray to compete for business.

This is one of the first times the Fed has specifically examined small business lending in a merger application, according to H. Rodgin Cohen, a partner at the Washington law firm of Sullivan & Cromwell. The Fed normally looks the concentration of deposits, which it considers a proxy for all banking services.

"This shows an increasing emphasis that has been building for some time on small business lending," Mr. Cohen said. "They haven't been as explicit in discussing the small business lending in the past."

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.